Written Evidence submitted by the Association of Labour Providers (FS0059)

 

The Environment, Food and Rural Affairs Select Committee’s inquiry Food Security invited evidence by 30th September as follows:

UK food supply chains are experiencing disruption caused by a range of factors, including the ongoing impacts of the pandemic, the war in Ukraine, labour shortages, the UK’s relationship with the EU, and increasing energy and fertiliser prices.

As a result, food prices are increasing which is affecting British consumers’ ability to access healthy and nutritious food, while questions are being raised about whether we produce enough of our own food.

The inquiry will look at what steps the Government can take to support food security by:

In particular, the Committee will consider the Government’s recently published food strategy policy paper, Defra’s role in responding to these challenges, and particularly the following areas:

  1. What are the key factors affecting the resilience of food supply chains and causing disruption and rising food prices – including input costs, labour shortages and global events? What are the consequences for UK businesses and consumers?
  2. What is the outlook for UK food price inflation in the short and medium term? What policy interventions should the Government consider to manage these pressures?
  3. How are the rising cost of living and increasing food prices affecting access to healthy and nutritious food?
  4. How will the proposals in the Government’s food strategy policy paper affect:
    1. the resilience of food supply chains?;
    2. the agri-food and seafood sectors?;
    3. access to healthy, nutritious food?
  5. Is the current level and target of food self-sufficiency in England still appropriate?
  6. How could the Government’s proposed land use strategy for England improve food security? What balance should be stuck between land use for food production and other goals – such as environmental benefit?

The ALP is pleased to submit the following evidence and information particularly related to the impact of labour shortages on food security and


Evidence Submission

1.1.       Food Supply Chain Labour Market - The principal factor limiting UK food production is a chronic shortage of workers.

Nationally unemployment is at a fifty-year low, vacancies are at record levels and the private sector available labour market is down around 1.5m on pre-pandemic levels – due to 300,000 extra working in the public sector and 1.2 million less people working as a result of fewer EU workers and higher economic inactivity due to an increase in the numbers of students, long term ill health and those inactive for ‘other reasons’ driven by a rise in the over 50s.

The May 2022 ALP Food Supply Chain Labour Market Survey found that almost half (49%) of UK food growers and manufacturers have rationalised or reduced their output due to labour shortages.  Over three quarters (77%) of these businesses are experiencing shortages of lower and unskilled workers, with 45% stating that these shortages are chronic.

The August 2021 Establishing the labour availability issues of the UK Food and Drink Sector report identified “potentially in excess of 500,000 job vacancies” from a workforce of 4.1 million, equivalent to a 12.5% structural vacancy rate.

The Environment, Food and Rural Affairs Commons Select Committee April 2022 report Labour shortages in the food and farming sector concluded “that UK’s largest manufacturing sector faces permanent damage if the Government fails to address the lack of workers” and “a need, at least in the short term, to increase the overall supply of labour through revised immigration measures to address the current crisis”.

The British Retail Consortium warns that if labour shortages are not resolved soon, “we will start to see production being lost from the UK and being offshored, and then imported back into the UK” and that labour shortages “threaten to shrink the sector permanently with a chain reaction of wage rises and price increases reducing competitiveness, leading to food production being exported abroad and increased imports.”

Martin Emmett, NFU horticulture Chair said he is convinced the whole produce sector will contract. “We are facing a crisis..The domestic labour supply is just not there – we’ve done banner campaigns, radio campaigns, prison programmes; and there is something fundamentally wrong with our immigration policy. We need to be positively welcoming people into our country [to help pick crops], and we need government help on that.”

1.2.       Government support to address labour shortages in the food supply chain

The EFRA Committee of MPs emphasised in the Labour shortages in the food and farming sector report that “The Government must radically shift its attitude and work together with the sector to devise solutions that speedily help address the problems it faces, in the short, medium and long-term to help the UK’s food industry and enable it to thrive”.

The Government did not shift its attitude.  In its 23 June response to the EFRA Committee Labour Shortages report, the government rejected almost all the recommendations, other than those already announced in the Food Strategy. Chair of the Committee, Sir Robert Goodwill MP responded:

“The government’s overall response to our recommendations is wholly inadequate. We continue to be concerned that labour shortages in the food and farming sector pose real risks of further price rises for consumers in supermarkets, reduced UK competitiveness and increased amounts of imported food.” and,

“The government really must listen to the experts – our farmers and our food producers. We need a more robust immigration regime that allows the farming and food sector to plan ahead with certainty and grow their businesses. Otherwise, we are placing in danger the very future of the sector.”

The June 2022 Government Food Strategy White Paper was largely silent on addressing food supply chain labour shortages other than three commitments:

       The welcome release of the additional provision of 10,000 visas under the Seasonal Worker Visa Route, including 2,000 for the poultry sector

       Government to work with industry to support the upcoming Migration Advisory Committee (MAC) review of the Shortage Occupation List

       The commissioning of an independent review to assess and ensure the quantity and quality of the food sector workforce.

1.3.       The increasing cost of labour

Between March 2016 and April 2022, Retail Price Inflation has been 28%, whilst NLW has increased by 42% and total wage costs by 48%.

This increase has been due to Government policy.  In 2015, the Government set the target for National Living Wage to reach 60% of median earnings by 2020.  This was achieved.  In 2020, the Government asked the LPC to increase the NLW towards a new target of two-thirds of median earnings by 2024.  Achieving this target will take millions of workers out of the OECD definition of low pay. As well as above inflation NMW increases, the last few years have seen a 0.5% Apprenticeship Levy, 5% auto-enrolment pension employer contribution and the Health & Social Care Levy increasing total wage costs.

The minimum hourly labour cost for horticultural seasonal workers has increased by 15% in the last year on account of new April 2022 Home Office rules setting a rate of £10.10 per hour.

Supposedly introduced to “force companies to pay those using the route a minimum salary to discourage poor conditions’ the introduction of this new minimum rate may best be described as shambolic.  It was introduced without consultation or industry engagement, with minimal notice and without impact assessment.  On challenge, the Home Office twice had to amend the rules as they were unworkable. There was no display of comprehension of the minimum wage regulations and no consideration of the fact that due to the principle of equal pay for equal work, most businesses would have to increase the pay to all of their workers, including those outside the Seasonal Workers Scheme, at very short notice and with limited capability to pass increased costs on. 

Food businesses have also needed to increase wage costs to attract and retain their workforce. The May 2022 ALP Food Supply Chain Labour Market Survey of food growers/manufacturers found:

       75% increasing wage rates, bonuses or other pay incentives in the last 6 months to address labour shortages

       54% planning to increase wage rates, bonuses or other pay incentives in the next 6 months to address labour shortages

1.4.       Addressing UK Food Industry Labour Shortages

The May 2022 paper Addressing UK Food Industry Labour Shortages details ALP position and proposals.  Drawing on key recommendations and recent developments:

       The Independent Review into Labour Shortages in the Food Supply Chain now underway “will consider the challenges facing food and farming businesses to recruit and retain the labour they require and will provide recommendations for industry and Government to consider. The review will encompass the roles of automation, domestic employment and migration routes.” This review, if well conducted, consultative and collaborative has the opportunity to set a roadmap to address short, medium and long term labour shortages in the food supply chain

       Domestic recruitment - The food industry is coalescing its work through the Food and Drink Sector Council Workforce and Skills Group with the vision that:

By 2030, the UK food and drink sector will be a leading contributor to a more productive, levelled-up UK economy, with a food system where all stakeholders can thrive. Our industry will provide rewarding employment for a diverse workforce, across the whole country, equipped with the skills to harness the opportunities of digitalisation and a greener economy.

One key objective is to Develop and lead an industry campaign that champions ‘Great British Food and Drink Careers’.  Currently there is no funding for this. Defra and DWP will need to demonstrate commitment to such a programme as the Department of Transport has done for the campaign for drivers, warehouse and logistics as seen in Generation Logistics.

       Seasonal workers’ visa route - The Seasonal Workers’ Scheme has been beset with difficulties.  The Guardian reports the latest of these Revealed: Indonesian workers on UK farm ‘at risk of debt bondage’.

The Independent Chief Inspector of Borders and Immigration (ICIBI) is conducting an inspection of the immigration system as it relates to the agricultural sector. In its submission, ALP focuses on the principal cause for this:

There has been no engagement between the Home Office and the ALP.  As far as ALP is aware, this lack of engagement applies to the whole of the agricultural sector.  Invitations to engage and proactively collaborate with industry stakeholders have been ignored.  In ALP’s opinion, this lack of engagement has been the most significant impacting factor on the operation of the Seasonal Worker Scheme manifesting in such ways as:

Government departments must work effectively and collaboratively with food industry and other expert stakeholders to address immediate shortcomings in the seasonal workers’ visa route.

       Skilled worker visa route - The Home Office should instruct the Migration Advisory Committee (MAC) to review the Shortage Occupation List and the operation and effectiveness of the Skilled worker visa route in addressing industry’s recruitment needs

 

September 2022