Boris Johnson faced business fury today after ministers dismissed calls for ‘uncontrolled immigration’ and warned workers must be paid better amid fears of food and fuel shortages this winter
Industry chiefs warned that the burden of higher wages will have to be passed on to consumers as the government dug its heels in despite rising alarm that supply chain chaos could continue for months.
There are concerns that could feed already-soaring inflation, sparking a spiral of higher pay settlements and spiking prices.
In a round of interviews at Tory conference in Manchester this morning, Chancellor Rishi Sunak tried to cool the tensions saying the government is ready to take ‘short-term’ action to help reduce the pressure.
‘But we can’t wave a magic wand and make global supply chain challenges disappear overnight,’ he said.
He said ‘in an ideal world’ the ‘higher pay is driven by higher productivity’ and is a ‘net positive for the economy’.
But Mr Sunak conceded that ‘the exact way that costs and prices manifest themselves’ will vary between parts of the economy.
He batted away concerns about spiking inflation, stressing that the Bank of England still believes it will be ‘transitory’ – even though massive rises in energy bills and other costs are already in the pipeline.
‘Wages are rising. That is a positive thing, that is a good thing,’ Mr Sunak told BBC Radio 4’s Today programme.
Farmers staged noisy protests outside the Tory gathering in Manchester this morning, after Mr Johnson shrugged off concerns about a mass culling of pigs because of a lack of abattoir staff.
Nick Allen, chief executive of the British Meat Processors Association, warned that customers would end up paying the price for the government’s stance.
‘What’s interesting is the (Government is) happy to ban the import of non-UK labour in this country, but they continue to actually aid and abet imported food from countries that have got access to this labour,’ he told Sky News.
‘At the end of the day someone has to pay for these increased wages and they somewhat get in the way of that by aiding and abetting imported food.’
In a round of interviews at Tory conference in Manchester this morning, Chancellor Rishi said the government is ready to take ‘short-term’ action to help reduce the pressure
Farmers staged noisy protests outside the Tory gathering in Manchester this morning, after Mr Johnson shrugged off concerns about a mass culling of pigs because of a lack of abattoir staff
There are concerns that could feed already-soaring inflation, sparking a spiral of higher pay settlements and spiking prices
How inflation threatens families and the public finances
Inflation has long been seen as one of the biggest threats to economies.
In extreme examples, it has spiralled out of control and sparked panic.
The German Weimar Republic effectively collapsed after the value of the mark went from around 90 marks to the US dollar in 1921 to 7,400 marks to the dollar in 1921.
In Zimbabwe between 2008 and 2009 the monthly inflation rate was estimated to have reached a mind-boggling 79.6billion per cent.
Although inflation has faded in the minds of Britons who have become used to ultra-low interest rates and stable prices, it caused chaos in the 1970s.
Deregulation of the mortgage market, the emergence of credit cards and an overheating economy drove the rate to an eye-watering 25 per cent in 1975.
People would rush to buy goods with their wages after pay-day, as the costs were rising so quickly.
Strikes erupted as there was pressure for pay packets to keep pace with prices.
Unemployment rose as the economy tipped into recession, and the government had to pump up interest rates in a bid to control the surge.
That meant mortgage interest payments spiked into double digits.
That meant servicing the national debt became a serious problem.
Mr Sunak has conceded there will be shortages this Christmas and said steps were being taken to ‘mitigate’ the problem.
But he said: ‘There’s nothing I can do about the decision by a country in Asia to shut down a port because of a coronavirus outbreak…
‘Be assured we are doing everything that is in our control to try and mitigate some of these challenges.’
Ministers increasingly see the issue of wages as a key dividing line with Labour. They believe Keir Starmer made a serious mistake when he suggested last week that 100,000 foreign truckers should be allowed to come to the UK to ease the problems – an idea that was later dropped.
Tory strategists hope that positioning against high immigration and in favour of higher wages will be popular in Red Wall areas.
Foreign Secretary Liz Truss inflamed the row yesterday by insisting the government is not ‘responsible for what’s in the shops’.
Meanwhile, Mr Johnson said ‘uncontrolled immigration’ was not the answer to the problems, arguing the country is going through a ‘period of adjustment’ to a higher-wage economy after Brexit.
Speaking at a Telegraph fringe event, Ms Truss was asked if Mr Johnson would be to blame for a grim Christmas of shortages. ‘I don’t believe in a command and control economy, so I don’t believe the Prime Minister is responsible for what’s in the shops,’ she said.
‘This is why we have a free enterprise economy, I’m sure that the goods will be delivered into our shops.’
Another Cabinet ministers told MailOnline the government was determined to take on sectors of the economy that are complaining about labour shortages.
They said even bringing back free movement would not resolve the issues and firms must increase wages and improve training of Britons.
‘We could restore free movement and throw open the borders, it wouldn’t solve this problem,’ they said.
‘There is a worldwide shortage of drivers. There are not the people who want to come and do the jobs.’
The minister added: ‘We need to lay it on the line to these sectors that have not been planning and doing the right things for many years.
‘They are getting tax breaks, super-deductions… what is it for if they are not investing in people?
‘We have not been through all that argument for Brexit just to accept uncontrolled immigration and low wages.’
The head of the NFU has described food shortages as a ‘welfare disaster’ as the union calls for a Covid recovery visa to allow firms to recruit from outside the UK.
Minette Batters, president of the NFU, said she has spoken to some angry pig farmers who are protesting outside the Conservative Party conference in Manchester following labour shortages across the supply chain.
She told the BBC Radio 4 Today programme: ‘They are protesting outside and they are angry, distraught and extremely upset.
‘They have been calling for this, we have been calling for an emergency scheme, a Covid recovery scheme, to be put in place to avoid this very scenario.’
She added: ‘I am desperate to get the facts of this story to the Prime Minister and that is what the pig farmers outside want to get across, the story of this disaster.
Many people – particularly in London and the South East – are still struggling to fill up vehicles amid driver shortages and supply chain disruption. Pictured, a petrol station in Bermondsey today
Mr Johnson dressed more appropriately for his jog this morning, after being photographed yesterday running in a suit shirt (pictured left). Right, Liz Truss
Ministers order petrol delivery surge for London and South East
Ministers have ordered fuel companies to target a ‘surge’ of deliveries to empty petrol stations in London and the South East as the army begins driving tankers from today.
Brian Madderson, chairman of the Petrol Retailers Association, said shortages were ‘getting worse’ in the UK’s most populous region, where ‘one in five’ filling stations were still dry.
In contrast, supplies in the North of England and the Midlands are said to be improving, with only 6 per cent of garages dry in the Midlands, northern England and Scotland.
Soldiers in combat gear were seen at the Buncefield oil depot in Hemel Hempstead this morning – with Business Secretary Kwasi Kwarteng understood to want the extra personnel to free up other drivers to prioritise areas most in need.
‘We need to see a rapid surge of supplies to London and the southeast,’ a government source told The Times.
‘It has been made very clear to the industry that the additional capacity from the armed forces needs to be used to get tankers to those areas where there are still significant petrol shortages.’
‘We have never had a cull of healthy livestock in this country and this cannot be a first. I can’t stress it enough, this cannot happen, there are vets outside as well. It is a welfare disaster.
‘Farmers produce food for the nation and I’m very proud to do it, we have very high standards of pork production in this country and we have to solve this issue.’
Culture Secretary Oliver Dowden tried to reassure the public that their turkey supplies are not in danger, saying there was a plan to shore up staffing in the meat industry.
Mr Johnson angrily denied yesterday that he was imposing too much tax on the country, saying the government had been hit with a ‘fiscal meteorite’ in the form of the pandemic.
He declined completely to rule out increasing taxes again – despite Cabinet ministers warning that the burden is as high as Britons can tolerate.
And he prayed Margaret Thatcher in aid, saying she would not have kept borrowing money to finance public services.
In a bad-tempered interview, Mr Johnson said: ‘When people voted for change in 2016 and when people voted for change again in 2019, they voted for the end of a broken model of the UK economy that relied on low wages and low skills and chronic low productivity – and we’re moving away from that.’
The premier conceded ‘there will be a period of adjustment’ but added ‘that is I think what we need to see’.
Asked when he was first warned about the HGV driver crisis, Mr Johnson said there have been shortages ‘for a very long time and it’s a chronic problem’.
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