ONS: Staff shortages and rising costs weighing on British businesses

Members of staff working between two-metre wide designated work stations on a car assembly line at the Vauxhall car factory during preparedness tests and redesign ahead of re-opening following the COVID-19 outbreak. Located in Ellesmere Port, Wirral, the factory opened in 1962 and currently employs around 1100 workers. It ceased production on 17 March 2020 and will only resume work upon the advice of the UK Government, which will involve stringent physical distancing measures being in place across the site. (Photo by Colin McPherson/Corbis via Getty Images)
41% of companies in the manufacturing industry admitted to seeing rising costs of materials and services. Photo: Colin McPherson/Corbis via Getty Images

An increasing number of UK businesses are struggling with rising costs of raw materials and a shortage of staff, new data has shown.

According to the Office for National Statistics, half of currently trading companies in the construction industry reported that the prices of materials, goods or services bought in the last two weeks had increased more than normal price fluctuations.

In addition to this, 41% of those in the manufacturing industry admitted the same.

This compared to around 25% of businesses across all sectors in mid-August, which has increased from 21% in late May, and from 14% of businesses at the end of 2020.

The research, which is based on responses from the Business Insights and Conditions Survey (BICS), also showed that 13% of firms had more difficulties filling vacancies in late August. This was up from just 9% earlier in the month.

Some 30% of those in hospitality (the accommodation and food service activities industry) admitted to vacancies being more difficult to fill than normal.

Across all businesses, the most difficulties experienced were a lack of suitable applicants for the roles on offer (67%), and reduced number of EU applicants (25%).

Read more: UK service sector growth slows amid staff shortages and supply chain disruption

These issues are being felt across different sectors, with a high percentage of paused and permanently ceased traders driven by the freight transport by road industry and the unlicensed carriers industry.

In July, the Road Haulage Association (RHA) reported that there is a shortage of 100,000 drivers and warned the situation has reached a “crisis point” with critical supply chains failing.

It said that many drivers have gone back to their home countries either due to uncertainty over new Brexit rules, or because of the UK's COVID-related lockdown restrictions. Many have not returned.

On top of this, HGV (heavy goods vehicle) drivers are made up of an ageing population that is retiring; and there is a major backlog of tests needed to be taken before drivers can qualify to operate lorries, because the tests were put on hold during the pandemic.

Read more: Get ex-cons driving lorries to ease HGV crisis, says logistics boss

On Thursday, the ONS said that the transportation and storage industry remained the sector with the lowest percentage of businesses currently trading, at 78%, compared to the average at 90%.

The data also highlighted a steady number (6%) of staff members on full or partial furlough leave. The proportion of businesses’ workforce reported to be on the government scheme was broadly unchanged from late July to mid-August.

The data suggested that approximately 1.4 million to 1.8 million people were furloughed within the industries surveyed in BICS.

This was the lowest proportion of businesses' workforce reported to be on furlough leave since the programme began. The furlough scheme is set to end on 30 September 2021.

Watch: Staff shortages and supply disruption threaten to derail recovery - BCC