Pragmatism is required from ministers as lack of workers looks likely to continue well into 2022
- UK petrol stations warn of fuel shortages due to lack of HGV drivers
Last modified on Thu 23 Sep 2021 15.01 EDT
Weeks of warnings from retailers about empty shelves, and appeals for visa rules to be relaxed temporarily for HGV drivers, fell on deaf ears in government. Are fuel shortages on BP forecourts the point at which ministers are forced to rethink?
There’s no sign of wavering in Westminster so far, but the political stakes are rising. We’ve already heard from the Brexit-supporting boss of Next, Simon Wolfson, that it is “insane” for the Home Office to prevent people coming to this country to work as drivers when their skills are “desperately” needed. John Allan, the chairman of Tesco, argued similarly this week, saying visa relaxation would be “a thoroughly sensible thing to do for the next six, 12, 18 months”.
These are heavyweight boardroom figures. Yes, they ignore their industry’s failure to anticipate shortages and recruit drivers. After all, Brexit isn’t an entirely new factor and nor was the ageing profile of the HGV driver population – another factor cited by Allan – a secret.
But the bosses are also reporting the facts on the ground today. Higher wages and signing-on bonuses for drivers (well deserved after years of seeing their skills under-priced) can’t alter the basic lack of qualified individuals. Pragmatism is required.
Nobody would pretend that relaxing visa rules is a cure-all, and certainly not one that would come in time for Christmas: EU countries have their own shortages. And, yes, the long-term answer is obviously more training and permanently higher wages. But the shortage of drivers looks likely to last well into 2022. Tweaking visa rules in preparation would be a minor act of common sense.
Chilling future for the energy price cap
The price cap on energy bills will rise by £139 on 1 October, as everybody knows by now, but thoughts are already turning to what happens at the next review, which will adjust the default tariff from April 2022. Paul Scully, the minister for small business, said on Thursday the government was having “conversations” with Ofgem about what’s in store next spring. He will be dismayed by what, one assumes, he heard.
The key point about the energy cap is that it is set via a mechanical formula that models wholesale prices in the preceding period. The degree of judgment and flexibility that Ofgem can apply is roughly zero.
Here’s energy consultancy Cornwall Insight’s analysis from earlier this week: “We are already in the six-month window for the summer 2022 cap, and with record wholesale prices now being priced in, we would need to see a material and sustained reduction in the wholesale market to avoid the kind of cap levels we are predicting for the period.”
What is its prediction? The modelling suggests an increase from £1,277 for a typical dual fuel direct debit customer to £1,455. So another chunky – and politically inflammatory – hike.
The “conversation” that ministers might wish they could have is one that considers ways around the awkward arithmetic. That, though, is a non-starter unless the government is prepared to rip up the entire system of independent price regulation, which would surely be a U-turn too far. Aside from improving the warm home discount, which now looks essential, the script is already half-written.
BA’s Gatwick short-haul plan grounded
British Airways’ plan for a separate short-haul subsidiary at Gatwick hasn’t even made it to check-in. The pilots, asked to approve a project that would have involved inferior terms and conditions, have voted against and BA is abandoning its idea – assuming, that is, the announcement was not a last-ditch negotiating ploy.
This turn of events is not a huge surprise. BA has tried twice in the past to run a low-cost operation and come up short; Go was sold to easyJet a couple of decades ago. Ryanair’s Michael O’Leary was making mischief when he predicted the now-grounded venture was “doomed to fail” but he was also reflecting the widely held view that it is tricky for a legacy carrier to turn a portion of its business into a lower-cost operation. The pilots have demonstrated how tricky.
In theory, it would be simpler for BA, if it views the short-haul European market as attractive in its own right, just to buy an established low-cost operator. On that score, the BA chief executive, Luis Gallego, gave a curious non-denial to the Sunday Times last weekend when asked if he had discussed a merger with executives at easyJet. “We talk to all airlines that can be interesting to us,” he was reported to have said. That could mean anything or nothing, but it was an intriguing thing to say.
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