A government led by Johnson was always going to be complacent but his brand of it is going to cost this country dearly. He is a natural optimist, that somehow things will suddenly resolve themselves or that somebody else will do it. The problem for Britain is that there is nobody above the prime minister to reel him in or override him. Storm clouds are certainly gathering at a pace now,
Covid looks all set to become a major problem again this winter with the government all set to continue to relax restrictions and open up the economy - just 'keeping an eye on things.'
Care homes are losing staff to better paid work elsewhere and are starting to refuse new patients. This will in turn prevent hospitals discharging elderly people who have had a fall for example. Coupled with covid and shortages of doctors and nurses, cause partly by Brexit and underfunding, and we have the makings of a real crisis.
And we are not out of the woods on supply chain issues. The Business Committee heard evidence from Duncan Buchanan of the Road Haulage Association and Ian Wright of the Food and Drink Federation. Some members of the committee may have been a bit shocked by what they had to say. Ian Wright in particular dispelled any idea that what we are seeing in terms of supply chain disruption is just a passing thing.
Wright said his members, six months ago, thought the problems would be ‘transitory’ but now think - all of them - that they are likely to last through until 2024!
Buchanan answered a question about why the government hadn’t acted on warnings from the RHA that came last year. He said it was complacency and he implied it was because some in government thought they were ‘scaremongering.’ I think we all recognise that don’t we?
Even now, I think the government is still complacent but probably less than they were and yesterday’s evidence probably helped. Asked if the recent announcement of new measures to tempt HGV drivers back from the EU would help alleviate problems before Christmas, Mr Buchanan gave a flat “no.”
Ian Wright claimed that wage inflation in the hospitality sector was running at 14-18% and he implied that other sectors weren’t far behind. One on-line retailer in Bristol was apparently offering warehouse workers £22 per hour for Christmas working plus a £3,000 signing on bonus.
Anybody who thinks these extra costs will not feed through into prices is fooling themselves. There is complacency here, too in my opinion. Over the last thirty years inflation has been tamed and politicians seem to think there is no need to be cautious, that it won’t return.
Amal Raja on Radio 4 said a 1% increase in bank rate to control inflation will cost the taxpayer £21 billion a year in debt interest payments alone. Interest rates are low at present (0.1%) and it's only likely to increase a tenth of a per cent at a time - initially anyway. But each point is worth £2.1 billion a year, think about that in the coming months.
It’s like living through the late 1960s all over again. The design office I worked in then had product catalogues with printed price lists that went out date within months, someone would scrawl +5% on the cover, then a few months later, +10% and so on until you spent half your time adding strange compounded percentages to parts cost when preparing an estimate.
Prices we quoted were valid for a few weeks only and subject to a formula afterwards to calculate escalation. The customer ordered something with an order value of say £2,000 but paid perhaps £2,200 when the invoice went in a few months later. Nobody knew exactly what they would pay for anything a few weeks into the future. It was utter madness.
