IS A WINTER OF DISCONTENT really ahead? That’s what the usual suspects and doom-mongers are telling us – with smiles from left-leaning think tanks and the BBC helpfully holding up signs that might as well say ‘shortages this way’. Even the likely next German Chancellor, Olaf Scholz has waded-in, saying “blame Brexit.”
There certainly is a whiff of discontent; a long-term shortage of truck drivers suddenly noticed, petrol being rationed on the forecourts, hospital waiting lists growing, and schools on go-slow. The usual media outlets helpfully quote questionable impartial ‘research’, as if it was fact rather than contested thesis, pointing to government induced austerity and poverty while wages are rising and inflation is in the air.
The narrative is powerful and judging by the speed of the media bandwagon and the queues at petrol stations the outlook looks bleak.
But why is this so and indeed is it really so? There is no single factor and much of the narrative is simply false but what we can be sure is Brexit is not the cause. The truth is much more complex.
There are multiple problems but most are a direct result of poor policy choices by Government flowing directly from lockdown, delusional public spending and a very poor bang for the buck. Britain is becoming a serious malcontent and grievance-based nation thanks to the peddling of a deliberately selective and false narrative.
Firstly, poverty they cry. The rich have gotten richer and the poor poorer. It’s a great line but not true. Britain is an averagely equal society in a western context according to the World Bank, no more no less and the gini coefficient shows the gap has actually narrowed in the last decade being lower in 2020 than it was in 2010. The UK is certainly not the great ‘unfair’ nation many on the left wish to believe. Absolute poverty has all but been abolished.
Further, this Government has thrown money at the economy to alleviate hardship. While much has admittedly been spent to offset their questionable extended lockdown strategy, a staggering £370 bn as confirmed by the National Audit Office, this has almost exclusively gone on furlough, loans and public spending. These benefits overwhelmingly have flowed to those in transient and often lowly paid sectors. But it is the taxpayer who foots the bill. They are the ones who are targeted to pick up the pieces from government largesse.
Finally, furlough may now be coming to an end but much of the money was used to support relatively seasonal short term work, the hospitality industry, being the clear and obvious case. How many people really work in Starbucks for 18 months?
Thus proportionately far more resource has gone to the forcibly locked-out private sector with the modestly off particularly protected at 80% salary for eighteen months. Now vacancies are at a record high and wages are rising so the unemployment claim looks increasingly thin does it not? Surely The Rowntree Foundation should be celebrating that?
The second great area of media and academic grievance is the so called austerity in the public sector. This is complete hogwash as the public sector has been spectacularly unaffected by lockdown. Indeed it is largely awash with support with public spending up 32% over the last 18 months as the private sector has withered.
Hardly a public sector job has disappeared although the quality of the product offered certainly has. According to the ONS public sector productivity is now 13% lower than 1999 in stark contrast to UK industrial productivity which is up over 30% over that period. Despite a dismal lockdown service the reward has been for the Government to cave into every union demand with public sector pay rises currently running at over 6% this year alone despite extreme reluctance at getting back to normality. So not much reason for discontent there surely?
But what of the shortages of hauliers and the petrol queues – it’s Brexit of course?
Claims that lorry driver shortages are ‘due to Brexit’ are not borne out by the facts: there were 303,878 lorry drivers in UK in 2019, of which EU drivers comprised 42,460 (14%) and UK drivers 257,956.
By Q2 of 2021 the number of HGV drivers in the UK had fallen by a staggering 70,931 to 232,947. Of this fall EU drivers dropped by 18,110 to 24,350 – but UK drivers were down by 52,821 (just short of three times worse). [Figures from The Grocer and this detailed report from Driver Require which explains the complexity of the problem.]
Why? Well last year due to Covid restrictions there was a drop of 42,658 LGV tests in the UK. At the moment these tests have still not returned to pre-pandemic levels and are running at less than 3,000 a month. The natural wastage from retirals and changing jobs is not being replaced and the DVSA and DVLA’s own workplace restrictions and strikes are holding back any recovery in numbers.
In terms of labour shortages the reality is that EU membership distorted and undermined the labour market by creating a near unlimited labour pool driving down labour costs (and incidentally tax receipts). This made working in haulage, hospitality and the like much less attractive, causing countless people to seek alternative careers. On the contrary Brexit should help ‘level up’ as the labour market should, in theory at least, represent the nation and not global capital flows.
It is, however, a myth to suggest the UK has a shortage of labour induced by Brexit. One might recall the Home Office initially thought just 17,000 East European’s would settle in the UK when borders were opened under Tony Blair. Then they thought most EU citizens would leave post Brexit so awful would its effects be. Official forecasts were then revised upwards to expect 3 million EU citizens to apply for settled status in the UK. So far 6 million have applied and many believe the final tally could be seven or eight million. I can think of no other Western country that has seen such a large proportionate inward migration flow as the UK over the last generation. Not one, but it’s never enough for the CBI and the Road Hauliers’ Association. There has been no exodus despite all the sage-like official predictions.
On top of that not only is there 1.5 million UK workers currently unemployed but a further 1.6 million still furloughed, a whole eighteen months after its inception, representing around 10% of the UK workforce, as currently inactive. Is it not odd that wages are rising in this context? Could it be that the furlough scheme has actually proven counter-productive in terms of encouraging people back?
Not all these currently inactive can be truck drivers of course but a successful economy would create incentives (low taxes and sensible regulation) as a signal to encourage work – not paying people to be forcibly inactive and then taxing those who do work more, thus reducing the incentive. Unfortunately this Government has taken the opposite path, taking taxation to the highest level since the drab 1950’s with regulation and control undreamt of.
On inflation, yes, the pessimists have a point. But is it a surprise if central bankers run a near zero interest rate policy for a dozen and more years, public spending is through the roof and there are supply shortages globally, as a direct result of decisions to close the economy – that inflation is taking off? Are they really surprised? Some of us have actually been warning about the risks if we don’t have corrections to the lax monetary policies.
Lockdown has indeed uprooted society but the simplistic ‘its Brexit’ is nonsense and those making that shout know it. There are problems of course, and if you lock large parts of the economy down for eighteen months there will be major issues as we come out of that (again, warnings on these pages have been given) but the truth is those who dislike the UK taking back control will use any excuse to stoke grievance – even if it causes miserly for us all.