ECONOMY

UK business hits back at government ‘blame game’

Employers have hit back at the government’s “horrifying” anti-business rhetoric after senior Conservatives accused companies of becoming hooked on cheap labour during Britain’s membership of the EU.

Ministers at the Tory party conference in Manchester this week have sought to shift at least part of the blame for supply chain shortages, including chaos on petrol station forecourts and empty supermarket shelves, on business’s failure to prepare properly for a post-Brexit economy.

At the same time a dozen energy companies have gone bust due to a spike in international wholesale gas prices. Businesses have warned of a looming “winter of discontent” unless the government does more to help solve the shortage of HGV drivers and other workers, which are in part due to the UK’s new immigration controls and the Covid-19 pandemic.

Craig Beaumont, chief of external affairs at the Federation of Small Businesses, said he was shocked by the government’s messaging, which he described as “pretty horrifying”.

Prime minister Boris Johnson rejected the accusation his government was not doing enough and told the BBC on Tuesday that companies had become too reliant on cheap, foreign labour. “Businesses have been able to mainline low-cost migration for a very long time,” he said.

Chancellor Rishi Sunak earlier warned that the government could not solve the supply chain crisis at a stroke. “We can’t wave a magic wand and make global supply chain challenges disappear overnight,” he said.

Kwasi Kwarteng, the business secretary, told companies they should “tough it out” rather than wait for state assistance.

One cabinet minister told the Financial Times that companies were “whingeing” about the fact that Britain was moving to a high-skills, high-pay economy. “Of course they don’t like it, because they’ve had it too easy with cheap foreign labour. But they need to stop whingeing,” the minister said.

Another senior minister said that the Covid furlough scheme — which saw a massive state intervention in the labour market — had created a culture where some businesses expected ministers to fix everything.

Roger Barker, head of policy at the Institute of Directors, said that “playing the blame game” was not helpful for businesses or consumers. He urged the government to work with businesses to solve the problems rather than ignoring the issues. “We need a viable plan for both short-term problems and long-term challenges.”

The Conservatives had long been considered Britain’s “party of business”, a reputation which has taken a hit during the lengthy tussles over leaving the EU. In 2018, at the height of the parliamentary Brexit rows, Johnson told a gathering of EU delegates “fuck business” as he rejected corporate concerns about a hard break with the EU.

“Where is the party of business?” asked Beaumont, adding: “The media were apparently to blame for the fuel crisis, then it was consumers to blame, and now business is to blame for low wages and supply chain shortages. It’s striking out at anyone they can find.”

Rod McKenzie, head of policy at the Road Haulage Association, said his organisation rejected what he called an “absurd” claim by the government that companies relied on cheap labour. “The market determines wage rate. The RHA and other bodies have no influence on what any company pays employees.”

McKenzie said many hauliers were running on tight margins and would struggle to absorb higher wages aimed at attracting more drivers, which meant the cost would eventually be passed on to consumers. He said there had “not been systematic undercutting of UK driver pay rates” by the industry when it employed workers from the EU.

Businesses are increasingly exasperated about the government’s adversarial position on the economy at a time when many companies are struggling with rising costs — in part owing to the proposed increases in national insurance and corporation tax — labour shortages and supply chain disruption.

Surveys from business groups have shown that confidence among companies in the UK has fallen sharply, risking future investment as the UK seeks to rebuild after the pandemic.

One executive said that all ministers cared about was “polling and votes,” adding: “These are transparent tactics. They have retrospectively decided that the reason for all these crises is the need to reboot the economy, and now they need an enemy to blame.”

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