On the back of the Prime Minister’s Conference speech, the self-styled “party of business” came in for a barrage of criticism.
As well as individual challenges from the likes of Next’s Lord Wolfson and Wetherspoon’s Tim Martin, organisations that lobby on behalf of businesses of all sizes and sectors hit out hard. This is no small thing as business groups tend to shy away from being overly critical of politicians in public so they can maintain good relationships and influence. That they’ve unanimously come out so strongly against the Government is significant.
Most interpreted the speech, and Boris’s subsequent comments, as putting the blame on business for what he euphemistically described in his speech as “the present stresses and strains”.
Right-leaning think tanks weren’t happy either. Ryan Shorthouse, chief executive of the think tank Bright Blue, said: “The public will soon tire of Boris’s banter if the government does not get a grip of mounting crises: price rises, tax rises, fuel shortages, labour shortages. There was nothing new in this speech, no inspiring new vision or policy.” While the Adam Smith Institute slammed it for being “economically illiterate”.
In his speech, Boris said: “We are not going back to the same old broken model with low wages, low growth, low skills, and low productivity. All of it enabled and assisted by uncontrolled immigration.” Later he doubled down on this position: “Businesses have been able to mainline low-cost migration for a very long time.”
Ministers are falling in line, with a cabinet minister telling the Financial Times: “Of course they don’t like it, because they’ve had it too easy with cheap foreign labour. But they need to stop whingeing.”
But as the Adam Smith Institute’s Daniel Pryor explains: “Sector-specific, and in many cases temporary, wage hikes do not translate into a broader shift towards a high-wage economy, nor do they necessarily boost productivity. At best, they are a particularly inefficient form of redistribution. Employers are likely to pass on these increased input costs to consumers, pushing up prices and leaving average real wages unchanged, or simply cut jobs.”
Or, as Giles Wilkes puts it: “You can’t make people prosperous when shrinking the pie.”
Or, as Tony Danker, director-general of the CBI, said in response to Johnson’s speech: “Ambition on wages without action on investment and productivity is ultimately just a pathway for higher prices.”
Or, as Danny Finkelstein (inspired by Margaret Thatcher) writes: “As a country, you can’t buy what you can’t pay for. And you can’t — for long, anyway — pay for things with money you don’t earn.”
Or, as our research director tweeted: “You can't increase real wages without increasing productivity. You can't increase productivity by creating shortages.”
You get the idea.
If blaming businesses is the strategy for dealing with the widely predicted new winter of discontent, then it will come at a cost. Most obviously in the short term by turning business owners against the Government. But eventually, we will all bear the cost of treating shortages as some sort of a master plan. And at some point, one would think, the party will bear the cost by being less electable.
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