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Anyone else having second thoughts about Brexit? | Sean O’Grady

Anyone else having second thoughts about Brexit? | Sean O’Grady
The answer is to relax the rules on immigration, and not just from the EU, and make use of those so desperate to come and live in Britain

Should the government ask the army to help out with delivering fuel? Well, if they don’t there will be a few more punch-ups at the pumps about diesel, I’d imagine. More crucially, there will be a political backlash against the government – and possibly even a few second thoughts about Brexit. Sooner or later an ambulance or a fire engine will run dry, with terrible consequences. What happens if there are problems with oil deliveries to rural homes? And airports? Public transport? Supermarket deliveries? Heavens, the tiger in Boris Johnson’s tank might stop roaring, and that would never do.

Maybe things will calm down in a few days, but we can’t really wait until then for, say, the builders to get to the construction sites, the teachers to get to school or the district nurse to make his or her rounds. The country is running on fumes. Drivers are needed now.

The problem with the military is that there may not be enough of them; they’ll have to be deployed, somehow, in the right places at the right times; and driving a petrol tanker requires special training. Because virtually everything runs on road transport, the effects of the shortages creep into every corner of life. The job of ministers is to deal with these sorts of problems and not just blame others; if they can’t fix things, there’s not much point to them.

Getting the squaddies behind the wheel will be a lot quicker than trying to get retired tanker drivers back to work. There’s a reason why they’re retired, after all, and some, who packed it in when you could still get green shield stamps, might not be able to do their patriotic duty, Dad’s Army style, even if they wanted to. Apparently Lieutenant Iain Duncan Smith still has an HGV licence from his time in the forces, so he’ll be in pole position for the Captain Mainwaring role. It’d be a joy to see him in charge of a cargo of highly combustible material again.

It’ll take even longer to persuade EU workers to hop over for a few months, because they’ll still need to get a visa and find somewhere to live. We no longer have freedom of movement, after all. Recruiting and training drivers will take months and be expensive. The army may have a more lengthy deployment than anyone might hope. Still, they’re used to that.

Who’s fault is it? Panic buyers? No. No such thing. It’s a classic version of game theory; there’s nothing panicky or irrational, if you know that everyone else is rushing out to buy something, to get out there yourself as soon as possible. The irrational thing is to sit around and let it pass. I’m quite proud that I got to the nearest petrol station as soon as the rumours began. The only regret I have is that I exercised a little restraint and didn’t fill the tank up to the brim. More fuel me.

The media? Not really. If there were petrol stations running dry then the news will soon spread, including by social media, which would probably be worse. It’s a fact, and people need to know. The media has to report the truth about what’s going on. It’s not the media’s fault that there’s a shortage of tanker drivers or HGV drivers. If the media refused to report on it there would still be a shortage of drivers.

Covid? Makes more sense because the HGV tests were cancelled and there was so much disruption to training. Brexit? Yes, that too. The positive thing to be said about freedom of movement of labour is that it allowed for shortages. Surpluses of labour in different occupations in different countries could be relatively smoothly resolved through market forces across a huge area. Now we have an arbitrary and cumbersome points-based visa system that forgets the UK is a large dynamic economy. Its shifting demands of labour can’t be catered for by bureaucracy.

Fundamentally, then, it’s obviously a shortage of labour in certain occupations. We can’t solve those by the media pretending they don’t exist. We could deal with the shortages in all these areas – hospitality, social care, haulage – by allowing wage levels to rise in those areas, but it might create new shortages elsewhere and won’t call forth that many returnees to the labour market. The supply of new entrants to the labour market is very small without immigration. So the economy will be smaller than it otherwise would be, unit labour costs will increase and profits will be lower.

It’s all very well to celebrate wage hikes for people that deserve them, but it doesn’t make a cost-effective economy. Higher wages will eventually mean higher prices and lower investment, and then lower productivity and lower real wages in the medium term. In the longer term it will mean more automation rather than more jobs. It might even ignite a wage-price inflationary spiral, and force the Bank of England to push interest rates and mortgage bills up.

Someone, somewhere, will have to pay for all these wage rises. It’s the price of Brexit and the price of the British aversion to inward economic migration. We can be happier, in those terms, but poorer with it.

The other answer, then, to a shortage of workers is an increase in the supply of workers. But issuing 5,000 short term visas to plug a long term gap of 100,000 drivers doesn’t add up. The answer is to relax the rules on immigration, and not just from the EU, and make use of those so desperate to come and live in Britain. This is economically obvious but politically noxious. We can get drivers from Ukraine or South Africa, they say, as well as from Poland or Romania, and I can believe that. Is it the Brexit the British voted for, though?