Boris Johnson will brush off petrol queues and empty shelves as evidence of a “change of direction” towards a high-wage economy on Wednesday, as he closes a Conservative conference at which supply shortages have barely been acknowledged. The prime minister channelled Margaret Thatcher on Tuesday to insist “there is no alternative” but to press ahead with the post-Brexit transition to a labour market less reliant on immigration. Asked whether the UK was facing a crisis, Johnson said “no”. “It’s not the job of government to come in and try and fix every problem in business and industry,” he said. Despite warnings from business groups of rising prices and continued shortages of key products in the run-up to Christmas, he will tell the party faithful in Manchester that a bright future lies ahead. “That is the direction in which this country is going – towards a high-wage, high-skill, high-productivity economy that the people of this country need and deserve, in which everyone can take pride in their work and the quality of their work,” he is expected to say. “We are not going back to the same old broken model with low wages, low growth, low skills and low productivity, all of it enabled and assisted by uncontrolled immigration.” Downing Street sources insisted the prime minister’s approach was not “Panglossian optimism” but a determination to ride out the disruption. Senior Conservatives said focus group and polling evidence is so far telling them the public do not blame the government for the supply crunch, and is “giving them the benefit of the doubt”, for the time being.
But one cabinet minister privately warned that if shortages persist, support for the government could drain away rapidly. Another frontbencher said they were concerned about complacency, pointing out that the petrol shortage was still gripping their constituency. In the US earlier this month, the prime minister insisted market forces would resolve petrol shortages, but within days of his return ministers had suspended competition laws in the energy sector and called in the army. Johnson and his top team have eschewed showy announcements at the four-day gathering in Manchester in favour of repeatedly hammering home the message that they are “getting on with the job” of levelling up the UK. In a nod to the concerns of southern Tories that levelling up is a hard sell in their constituencies, the prime minister will reframe it as a way of alleviating overcrowding. He will claim the policy will “take the pressure off parts of the overheating south-east while simultaneously offering hope and opportunity to those areas that have felt left behind”. Business groups have been irked by the government’s insistence that it is up to the private sector to resolve the supply chain problems that have beset a string of industries. James Martin, the director of policy at the British Chambers of Commerce, said: “Business supports the government’s ambition to move to a sustainably high-skilled, high-wage economy which does more to harness homegrown skills and talents, but this is a huge transition that will not happen overnight … Simply riding it out is not an option.” Business groups pointed out that firms are facing massive increases in a number of upfront cost pressures, including raw materials and shipping, with an impending rise in national insurance contributions coming on top. Martin warned that prices would have to rise. “Given the strains that business is being placed under, it is almost inevitable that many will have to raise their prices to remain viable and our own data suggests that this process is already underway.” Johnson played down fears about inflation on Tuesday, saying: “People have been worrying about inflation for a very long time. I’m looking at robust economic growth.” Inflation was running at 3% last month, and domestic energy prices are expected to continue rising sharply in the coming months. Cash-strapped consumers are also about to be hit by the £20 a week cut in universal credit and the 1p increase in national insurance contributions.
The National Farmers’ Union vice-president, Tom Bradshaw, said: “Farm businesses have done all they can to recruit staff domestically, but even increasingly competitive wages have had little impact because the labour pool is so limited – instead only adding to growing production costs. A solution to this crisis will need the right people with the right skills and training available in rural areas where many roles are based.” He called for a short-term Covid recovery visa, alongside a permanent seasonal workers scheme, which would give farmers time to invest in the skills and recruitment of a domestic workforce. Tony Danker, the director general of the CBI, told BBC Radio 4’s Today programme: “We’ve got labour shortages, high gas prices, supply chain pressures, we need government and business working together to solve this. The idea that one side alone can solve what is a pretty significantly stressful moment for the global economy, I just don’t think that’s helpful.” The latest official figures showed average earnings increasing by 6.8% in the year to July; but the Office for National Statistics warned that “interpretation should be taken with caution,” because the growth partly reflects workers returning from furlough.