‘Stop making businesses the bogeymen’: Britain’s top bosses accuse Boris Johnson of setting country on the path to high inflation amid fears labour shortages will trigger spiralling prices unless the Government intervenes
- Boris Johnson has been accused of setting Britain on the path to high inflation
- Firms warned labour shortages will lead to spiralling prices without intervention
- In his Tory conference speech PM admitted reshaping economy will be ‘difficult’
Industry chiefs last night accused Boris Johnson of setting Britain on the path to rampant inflation as the Prime Minister stepped up his battle with business.
Firms warned labour shortages – which have triggered empty shelves and queues at petrol stations – will lead to spiralling prices unless the Government intervenes.
In his Conservative Party conference speech yesterday, Mr Johnson admitted the process of reshaping the economy to one with less immigration and better wages will be ‘difficult’.
But he insisted he will not change course as he accused bosses of using mass immigration as ‘an excuse’ not to invest in their company or staff.
However business leaders hit back last night, accusing Mr Johnson of treating them like the ‘bogeyman’ over the UK’s labour shortages.
Industry chiefs last night accused Boris Johnson of setting Britain on the path to rampant inflation as the Prime Minister stepped up his battle with business
Analysis of price rises in the last year shows the cost of a second-hand car has risen more than £1,600, a tank of fuel is up more than £10 and the price of a pint of beer is creeping close to £4
Exclusive research for the Daily Mail by the Centre for Economics and Business Research (CEBR) also yesterday revealed how inflation will cost the typical family of four an extra £1,800 by the end of this year. Meanwhile, a retired couple can expect to see living costs rise by more than £1,100, and a lower income couple could be stung by nearly £900
Boris’s speech to conference – key points
- He invoked Margaret Thatcher in defence of his tax and spend plans, saying she ‘would not have ignored this meteorite that has just crashed through the public finances – she would have wagged her finger and said that more borrowing now is just higher interest rates and even higher taxes later.’
- He hit out at ‘decades of drift and dither’ from previous governments – Labour and Conservative – lacking the ‘guts’ for major change
- Said he is ’embarking on a change of direction that is long overdue in the UK economy’.
- Said it is time to invest in the UK rather than rely on cheap foreign labour
- Said he wanted ‘a high wage, high skill, high productivity economy that is a low tax economy’
- Bemoaned regional and local inequalities, saying it was ‘an appalling waste of potential that is holding this country back’
- Admitted change ‘will take time. Sometimes it will be difficult’
- Accused Labour of being fond of ‘levelling down’
- Hit out at working from home, saying ‘we can and must see people back in the office’
- Said a ‘tide of anxiety’ is washing into A&E departments and GP practices, as he defended his multi-billion pound tax hike to pay for NHS and social care
- Brands Insulate Britain road protesters a ‘confounded nuisance’ and says Home Secretary Priti Patel will ‘insulate them snugly in prison where they belong’
- Praised the NHS treatment he received when he had Covid last year, thanking ‘the wonderful nurses (who) pulled my chestnuts out of that Tartarian pit’
- Criticised ‘lying, bullying, cowardly’ men as he addressed violence against women and girls.
Speaking yesterday at the conference, in Manchester, Mr Johnson said: ‘That’s the direction in which the country is going now – towards a high-wage, high-skilled, high-productivity and, yes, thereby a low-tax economy.
‘That is what the people of this country need and deserve,’ the Prime Minister said.
‘Yes, it will take time, and sometimes it will be difficult, but that is the change that people voted for in 2016.’
But he faced a tsunami of criticism from the private sector which accused him of indulging in ‘anti-business rhetoric’ and ‘playing the blame game’.
The Confederation of British Industry (CBI) warned the economy is at a ‘fragile moment’ with the risk of inflation becoming a problem.
Director general Tony Danker said: ‘The Prime Minister has set out a compelling vision for our economy: High wages, high skills, high investment and high growth.
‘But the PM has only stated his ambition on wages. This needs to be backed up by action on skills, on investment and on productivity.
‘Ambition on wages without action on investment and productivity is ultimately just a pathway for higher prices.’
Shevaun Haviland of the British Chambers of Commerce said a change to a high-wage economy ‘will not happen overnight’.
‘There is much in the Prime Minister’s ambition for the future of the United Kingdom which should be rightly applauded, but what businesses urgently need are answers to the problems they are facing in the here and now,’ she said.
Mark Littlewood of the Institute of Economic Affairs said: ‘Unnecessarily restricting the supply of labour may lead to wage increases, but these will be passed on in price increases.
‘A strategy to make things more expensive will not create a genuinely high-wage economy, merely the illusion of one.’
Ahead of the speech, the boss of high street chain Next warned there is ‘real panic and despondency’ over labour shortages in sectors of the economy.
Lord Wolfson, who backed Brexit, said suggestions big business needs a shock were wrong.
‘I think that that approach leads to queues at petrol stations and pigs being unnecessarily shot, so I don’t think that’s a particularly constructive approach,’ he told BBC Radio 4’s Today programme.
‘Rather than try and solve this problem with people throwing brickbats at each other, we sit down together, work through and design a system that delivers the best of both worlds.’
In his Conservative Party conference speech yesterday, Mr Johnson admitted the process of reshaping the economy to one with less immigration and better wages will be ‘difficult’
Home Secretary Priti Patel greets Carrie Johnson as she arrives for Boris Johnson’s leader’s keynote speech (Photo by Ian Forsyth/Getty Images)
(L-R) Britain’s Conservative Party charperson Oliver Dowden, Chancellor of the Exchequer Rishi Sunak and home Secretary Priti Patel chat as they wait for the keynote speech
MATTHEW LESH
Head of Research, the Adam Smith Institute
‘Boris’ rhetoric was bombastic but vacuous and economically illiterate.
‘Boris is hamstringing the labour market, raising taxes on a fragile economy and shying away from meaningful planning reform.
‘Shortages and rising prices cannot simply be blustered away with rhetoric about migrants.’
TONY DANKER
Director General, Confederation of British Industry
‘Ambition on wages without action on investment and productivity is ultimately just a pathway for higher prices’.
MARK LITTLEWOOD
Director General, Institute for Economic Affairs
‘[Boris] says he wants a low tax economy, but his government is likely to oversee the highest burden of tax since the Attlee post-war socialist government.’
MANUEL CORTES
General Secretary, Transport Salaried Staffs’ Association
‘As ever, this political jester came up with nothing but hot air.’
LORD WOLFSON
CEO of Next
Warned of ‘real panic and despondency’ in the restaurant, hotel and care industry because of a lack of staff.
SHARON GRAHAM
General Secretary, Unite
‘Without serious action, this speech is nothing more than headline-chasing by a prime minister desperate to deflect from the serious and growing cost-of-living crisis happening on his watch.’
Mr Johnson meanwhile faced a backlash from Brexit-supporting business leaders, who accused him of treating them like ‘the bogeyman’ over labour shortages.
Richard Walker, the managing director of Iceland and a Leave voter, ac-cused the government of treating businesses like an “endless sponge”.
He told the Times: ‘The finger is being pointed at business as the bogeyman, but it’s much wider than that. We want to pay our people as much as possible but business is not an endless sponge that can keep absorbing costs in one go.
‘Next year we’ll have a wave of higher costs from higher energy bills, extra HGV drivers, packaging costs. We can only weather so many cost increases at once, so they need to taper it.’
Meanwhile, Tim Martin, the boss of pub chain JD Wetherspoon, who was a staunch supporter of Brexit in the run-up to the referendum, also warned about the impact of changes to migration on businesses such as his.
He told the Times: ‘Brexit decided that immigration policy should be decided by those we’ve elected, not what the policy should be.
‘The UK now needs an intelligent debate as to the details of the policy.’
Mr Johnson’s address to the Tory party conference yesterday came amid an increasingly grim economic backdrop, with warnings that more energy suppliers face going bust as natural gas costs spiked by another 40 per cent.
The UK government’s borrowing costs rose to the highest level since May 2019 yesterday, as markets took fright at the prospect of inflation going even higher.
In further worrying signs, the latest PMI figures suggested the economic recovery stalled last month – raising the threat of so-called ‘stagflation’.
Meanwhile, the CBI warned that the premier’s determination to drive up wages would put the country on a ‘pathway to higher prices’ unless he has comes up with a way to boost productivity.
Matthew Lesh of Thatcherite think-tank the Adam Smith institute said: ‘Boris’ rhetoric was bombastic but vacuous and economically illiterate.
‘Boris is hamstringing the labour market, raising taxes on a fragile economy and shying away from meaningful planning reform. Shortages and rising prices cannot simply be blustered away with rhetoric about migrants.’
In the only crumb of policy today, Mr Johnson announced a £3,000 ‘Levelling Up’ premium for talented maths physics chemistry teachers to go and work in deprived areas.
He did try to soothe anxiety in Tory ranks by saying he wanted there to be ‘low tax’ in the longer term, as well as promising not to ‘jam’ homes in the South East and to fight ‘woke’ historical revisionism.
But the PM is facing growing unrest over his blunt denial that the country is in ‘crisis’ with petrol stations running dry, spiking inflation and labour shortages.
Amid warnings that millions of families with struggle to make ends meet this Christmas, he has argued it is ‘not his job’ to ‘fix’ all the problems for industry.
Mr Johnson also defended his decision to create a new health and social care levy during his speech yesterday, as he said he believes helping the NHS is the top priority of the British people.
Mr Johnson pointed to the damage done by the coronavirus crisis to the national coffers as he said ‘Margaret Thatcher would not have ignored the meteorite that has just crashed through the public finances’.
He said the Tories’ plans for the NHS will see 48 new hospitals built and 50,000 more nurses recruited.
He said the Government’s social care plan will help to better link up the health service and the social care system.
Mr Johnson insisted the extra cash raised by his £12billion a year tax raid will be spent on frontline services and ‘not on needless bureaucracy’.
He said that his government is tackling the big issues like social care reform as he claimed past administrations had not had the ‘guts’ to.
He also pushed his ‘Levelling Up’ agenda.
Mr Johnson said in some areas the UK is one of the most imbalanced developed nations as he pointed to regional discrepancies on metrics like life expectancy.
He said those differences amounted to an ‘appalling waste of potential’ and insisted there is no reason why people should be ‘geographically fated’ to be poorer or less healthy than their counterparts elsewhere in the UK.
Mr Johnson said his ‘levelling up’ agenda is the ‘right and responsible policy’ to deal with those issues.
Helping ‘left behind’ areas would also help to reduce pressure on the ‘overheating’ south east of England, he said.
The Prime Minister said that his Government will ‘promote opportunity with every tool we have’.
The single policy announcement contained in the speech related to ‘levelling up’ as the PM announced a new ‘levelling up premium’.
It will see high-flying maths and science teachers offered a grant of up to £3,000 to work in areas of the country which need them the most.
Headline CPI inflation has been spiking, reaching 3.2 per cent in August, and is expected to reach double the Bank of England’s 2 per cent target
Yesterday the price of gas reached 400p per therm – the first time it has reached that level – as concerns about supplies from Russia and predictions of a cold winter in Europe pushed the price up by a fifth in 24 hours. The price was 150p a month ago and below 50p from February to May
While the reception was warm inside the Tory party conference, outside millions were left facing a looming winter energy crisis, with experts warning that gas and electricity bills will surge by at least £500 a year.
Soaring energy costs saw gas prices rising by a staggering 37 per cent in a single day and pushing more energy firms to the brink of collapse while the National Grid warned of electricity shortages as the country faces its worst crisis since the first Covid outbreak last year.
More UK energy suppliers set to fail as wholesale prices soar leaving consumers with rocketing bills
Britain’s retail energy sector will see more failures from suppliers and increased market consolidation due to a sharp rise in wholesale energy prices, rating agency Moody’s said today.
The sector faces pressures on profitability and an increased risk of credit negative political intervention, the agency added.
Nine British energy suppliers ceased trading last month alone. Smaller suppliers with less capital are struggling amid record wholesale power and gas prices across Britain and Europe, while price caps prevent the full rises from being passed on to consumers.
Experts believe that if gas prices remain at around this level, which is now predicted, the average household energy bills could jump by as much as a third or £420 to almost £1,700 a year from April. Today the cheapest fixed gas and electricity deal available in the UK is £1,700 – a month ago it was £1,177.
Ofgem will automatically move customers when companies go to the wall. But energy market rules demand that customers whose supplier goes bust must be offered a fair deal by the new supplier – not the same one they had – meaning they are likely to pay significantly more.
‘More (failures) will follow with Renewable Obligation payments due in October,’ Moody’s said.
British ministers are also looking at a range of options to help companies such as National Grid Plc (NG.L), Centrica Plc (CNA.L), EDF (EDF.PA) that have taken on a flood of customers from failed suppliers.
Profitability at those firms will be affected until higher prices are passed on to customers, Moody’s said.
Rising inflation driven by labour shortages, growing energy costs, a lack of HGV drivers and gaps in global supply chains are contributing to the problem, as it was revealed hard-pressed families face paying £1,700 more for energy in April and an extra £1,800 for other essentials by Christmas.
Joe Malinowski, founder of TheEnergyShop.com, warned of a ‘gas bill explosion’, adding: ‘As things currently stand, we are headed for another increase of at least £500. If things don’t settle down soon, increases of £600, £700 or even £800 cannot be ruled out.’
Customers of small energy firms could face even bigger increases if their supplier fails. Mr Malinowski warned that ‘energy suppliers are falling like dominos’ and without political action ‘the outcome will be terrible for consumers’.
The price of wholesale gas meanwhile surged by £1 a unit to 400p per therm yesterday morning – up 37 per cent in a day and 600 per cent higher than the start of 2021.
Prices reversed course hours later, sending the UK contracts back to £2.87, after Russian President Vladimir Putin sought to stabilise the gas market by saying that state-backed monopoly exporter Gazprom could increase supplies to Europe. Critics accused Mr Putin of trying to stave off allegations that Moscow is trying to ‘weaponise’ gas supplies amid tensions between Russia and NATO powers over Ukraine.
On a day of worsening news, National Grid’s chief executive John Pettigrew told the FT yesterday that Britain will face tighter electricity supplies this winter due to a lack of capacity in the system and a colder winter predicted, which means the cost of electricity will increase as gas prices spike to record high.
Investment experts Moody’s also warned that more UK energy firms will go to the wall, which will push hundreds of thousands of people on to more expensive tariffs with new providers. While Britain’s Energy Intensive Users Group, which represents steel, chemical and fertiliser firms, said production at some plants is already being halted ‘at times of peak demand’ due to energy prices. They have called on the Government to give financial support to keep businesses in the way a taxpayer-funded deal to curb CO2 shortages was done to keep two fertiliser plants running last month.
The explosive rise that will hit households and businesses is being fed by fears that a cost of living crisis has arrived as global oil prices also jumped to a three-year high of $83 a barrel. And as a result new figures show average petrol prices have hit 136.10p per litre, the highest level since September 2013.
Despite all this, the Prime Minister gave only a cursory mention of the crisis rocking Britain and merely indicated there are ‘difficulties’ to come – instead giving a rambling keynote speech to the Tory faithful at the party conference which was instead packed with jokes and almost entirely devoid of new policies.
Business leaders slammed Mr Johnson’s speech, with the Confederation of British Industry warning that his economic policies could stoke inflation while the British Chambers of Commerce accused him of failing to provide firms with urgent answers ‘to the problems they are facing in the here and now’.
Trade union leaders also lined up to condemn Mr Johnson. Unite’s new general secretary Sharon Graham raged: ‘Without serious action, this speech is nothing more than headline-chasing by a prime minister desperate to deflect from the serious and growing cost-of-living crisis happening on his watch.’
Manuel Cortes, general-secretary of the TSSA transport union, added: ‘As ever, this political jester came up with nothing but hot air.’ Another critic said: ‘Britain burns while Johnson fiddles’.
Some of the key points from Boris Johnson’s key note speech at the Tory party conference
BORIS RECOUNTS HIS BOUT WITH COVID AND SAYS THE ‘NHS SAVED ME’
Boris Johnson spoke at length about his time in hospital last year when he was battling coronavirus.
He recalled looking ‘blearily’ out of his window at St Thomas’ Hospital in central London and spotting a hole in the ground in between the intensive care unit and an older part of the building.
He said: ‘Amid the rubble of brick, they seemed to be digging a hole for someone or something or indeed someone – possibly me.
‘But the NHS saved me and our wonderful nurses pulled my chestnuts out of that Tartarian pit and I went back on a visit the other day and I saw that the hole had been filled in with three or four gleaming storeys of a new paediatrics unit.
‘And there you have a metaphor my friends for how we must build back better now.’
BORIS DEFENDS TAX RISES AS HE SAYS THATCHER WOULD BACK REPAIRING PUBLIC FINANCES AFTER COVID ‘METEORITE’
The Prime Minister defended his decision to create a new health and social care levy as he said he believes helping the NHS is the top priority of the British people.
Mr Johnson pointed to the damage done by the coronavirus crisis to the national coffers as he said ‘Margaret Thatcher would not have ignored the meteorite that has just crashed through the public finances’.
He said the Tories’ plans for the NHS will see 48 new hospitals built and 50,000 more nurses recruited.
He said the Government’s social care plan will help to better link up the health service and the social care system.
The Prime Minister defended his decision to create a new health and social care levy as he said he believes helping the NHS is the top priority of the British people
Boris (left) and wife Carrie arrive at the Conservative Party conference at Manchester Central Convention Complex onWednesday
In further worrying signs, the latest PMI figures suggested the economy recovery stalled last month – with the construction sector barely growing at all. Figures above 50 represent growth
Mr Johnson insisted the extra cash raised by his £12billion a year tax raid will be spent on frontline services and ‘not on needless bureaucracy’.
He said that his government is tackling the big issues like social care reform as he claimed past administrations had not had the ‘guts’ to.
PM BLASTS ‘UNCONTROLLED IMMIGRATION’ AND PROMISES SHIFT TO HIGH WAGE ECONOMY
Mr Johnson told Tory members that ‘wages are going up faster than when the pandemic began’ as he insisted his Government is overseeing a ‘change in direction’ on the UK economy ‘that has been long overdue’.
He blasted past ‘uncontrolled immigration’ and said that he wants to shift to a high wage, high skill economy.
He attacked businesses who have called for more visas for foreign workers to ease staff shortages as he said the solution to pressures is ‘not to reach for that same old lever of uncontrolled immigration’ which he said keeps wages low.
Mr Johnson said it will ‘take time’ to shift to his vision of a ‘high wage, high skilled, high productivity’ economy.
He admitted ‘it will be difficult’ along the way ‘but that is the change people voted for in 2016’ at the Brexit referendum.
BRITS MUST NOT BE ‘GEOGRAPHICALLY FATED’ TO POVERTY
Mr Johnson said in some areas the UK is one of the most imbalanced developed nations as he pointed to regional discrepancies on metrics like life expectancy.
He said those differences amounted to an ‘appalling waste of potential’ and insisted there is no reason why people should be ‘geographically fated’ to be poorer or less healthy than their counterparts elsewhere in the UK.
Mr Johnson said his ‘levelling up’ agenda is the ‘right and responsible policy’ to deal with those issues.
Helping ‘left behind’ areas would also help to reduce pressure on the ‘overheating’ south east of England, he said.
The Prime Minister said that his Government will ‘promote opportunity with every tool we have’.
The single policy announcement contained in the speech related to ‘levelling up’ as the PM announced a new ‘levelling up premium’.
It will see high-flying maths and science teachers offered a grant of up to £3,000 to work in areas of the country which need them the most.
INSULATE BRITAIN ARE A ‘CONFOUNDED NUISANCE’, SAYS PM
A crackdown on crime was a significant section of the PM’s address as he blasted the Insulate Britain group for its recent wave of disruptive protests.
Mr Johnson said he does not believe the group are ‘legitimate protesters’, describing them as a ‘confounded nuisance’.
He said the group is ‘stopping people going about their daily lives’ and he is ‘glad’ Home Secretary Priti Patel has announced new powers to prevent protests disrupting critical national infrastructure.
He said Ms Patel’s reforms will ‘insulate them snuggly in prison where they belong’.
He also vowed a further crackdown on drugs gangs and promised to boost rape conviction rates.
PM URGES MORE WORKERS TO RETURN TO THEIR OFFICES
The Prime Minister signalled he wants to see working from home dramatically curtailed as he urged more employees to head back to office buildings.
The Government urged workers to stay at home where possible during the worst of the coronavirus pandemic.
Ministers have recently been suggesting they would like to see more workers return but they have stopped short of expressly telling staff to go back.
But Mr Johnson went further today as he told the conference hall: ‘We will and must see people back in the office.’
PM VOWS TO FIX ‘BROKEN’ HOUSING MARKET
Mr Johnson said it is a ‘scandal’ that the dream of home ownership has ‘receded’ over the past decade.
But he insisted that the tide is now turning as the Government tries to boost housebuilding across the UK.
The Prime Minister promised to fix the ‘broken’ housing market as he said there is ‘no happiness like taking a set of keys and knowing the place is yours’.
He also said that good homes, combined with better broadband, better transport links and better worker skills will help to boost the nation’s lagging productivity.
The Prime Minister signalled he wants to see working from home dramatically curtailed as he urged more employees to head back to office buildings
The Prime Minister promised to fix the ‘broken’ housing market as he said there is ‘no happiness like taking a set of keys and knowing the place is yours’
BORIS BLASTS ‘WOKE’ ACTIVISTS AS HE PROMISES TO DEFEND UK’S ‘CULTURAL INHERITANCE’
The Prime Minister reserved some of his toughest words for so-called ‘woke’ activists who he accused of trying to ‘rewrite our national story’.
He said that initially he had planned to ignore attacks on Sir Winston Churchill after the former PM was labelled a ‘racist’ by some protesters.
But he said he decided to wade into the row due to concerns the UK was heading towards a ‘know nothing, cancel culture’.
He vowed to defend the UK’s history and ‘cultural inheritance’ as he said it would be ‘dishonest’ to edit the past, comparing those efforts to making changes to a Wikipedia entry.
PM INVOKES THE SPIRIT OF EMMA RADUCANU AS HE PRAISES ‘TRAILBLAZER’ UK
The Tory premier pointed to the success of the UK’s sports men and women as he closed his conference speech by promising to ‘unleash’ the nation’s ‘trailblazer’ spirit.
Mr Johnson told activists that the UK has a ‘unique spirit’ which is embodied by tennis player Ms Raducanu and the England football team.
He said: ‘I mean the spirit of the footballers who took England into the final of a major knock out tournament for the first time in the lives of the vast majority of the people of this country, the indomitable spirit of Emma Raducanu, her grace and her mental resilience when the game was going against her.
‘Because that is what counts. The spirit of our Olympians. It is an incredible thing to come yet again in the top four – a formidable effort for a country that has only 0.8 per cent of the world’s population.’
Mr Johnson said the UK’s second overall position at the Paralympics ‘shows our values’, adding: ‘Not only the achievement of those elite athletes, but a country that is proud to be a trailblazer, to judge people not by where they come from but by their spirit, what is inside them.’
The PM said that spirit is ‘the same across this country’ and it can be found in the ‘hearts and minds of kids growing up everywhere’.
‘That is the spirit we are going to unleash,’ he said.
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