Jeremy Hunt promised business leaders he would work with them to overcome immigration barriers that prevent foreign skilled workers from filling jobs in the UK.
The chancellor told the British Chambers of Commerce (BCC) annual conference in London the government was prepared to adapt policy following discussions with business groups to tackle problems in the “short-term”.
Since we left the single market we have been pragmatic when it comes to immigration requirements. So for example, we put care homes on the shortage occupation list, some construction industry sectors, and we will keep talking to all of you about where there are short-term challenges.
But he emphasised the government’s focus was to support UK workers unable to join the labour force, citing parents excluded from taking up jobs due to the high cost of childcare and people with back problems who have taken early retirement.
Immigration has become one of the most fraught topics within the cabinet, with estimates showing net migration may have hit nearly 1m last year.
Home secretary Suella Braverman argued this week that Brits should be trained to drive trucks, work in the meat industry and gather crops as a way of easing labour shortages, rather than businesses relying on migrant labour. Her comments were seen as a rebuff to cabinet colleagues, including Hunt, who have backed easing visa rules as a way to promote economic growth.
Home secretary Suella Braverman has called for Brits to be retrained to fill labour shortages, rather than importing workers. Photograph: Sergio Azenha/Alamy
But BCC director general Shevaun Haviland has said said 80% of BCC members looking to hire staff “are facing real challenges” that could not be addressed by domestic training policies alone.
Hunt defended his handling of the economy and public finances on Wednesday, saying he had brought stability to the economic outlook and protected public investment spending.
He said independent forecasters believed the government was on track to meet Rishi Sunak’s targets of halving inflation and growing the economy, but there was “nothing automatic” about controlling rising prices:
There’s a plan, we are going to stick to it. The Bank of England has a role through monetary policy and interest rates, we support them 150% with that.
But we have our role in government, what I do on the fiscal side in terms of tax and spend has an influence and if markets judge that we are not getting our borrowing under control they will punish us with higher interest rates.
The Financial Times’ economics editor Chris Giles believes Andrew Bailey “has acknowledged for the first time the Bank of England is dealing with a UK wage price spiral” in his speech to the British Chambers of Commerce annual conference.
But is it the first time?
The FT argues that Bailey used novel language when he told business people in London that inflation staying high “reflects second-round effects as the external shocks we have seen interact with the state of the domestic economy,” and that “as headline inflation falls, these second-round effects are unlikely to go away as quickly as they appeared.”
However, in the Bank of England report last week, the monetary policy committee said there were second round effects already in play, and it was possible they would prolong inflation.
It said:
The Committee continues to judge that the risks around the inflation forecast are skewed significantly to the upside, reflecting the possibility that the second-round effects of external cost shocks on inflation in wages and domestic prices may take longer to unwind than they did to emerge.
The mean CPI inflation profile, which incorporates this risk, is at or just below the 2% target in the medium term.
HMRC bosses have assured MPs on the Treasury Committee that the tax office is transparent about which groups and individuals they are meeting with who might be trying to lobby them for tax changes.
The public can see the wide range of conversations we have with individuals.
He says this is included in committee and group minutes that he will subsequently share with MPs in the wake of the hearing.
The tax system has become more complex, HMRC’s director of customer strategy and tax design, Jonathan Athow, has told the Treasury Committee.
However, the challenge of trying to make the UK’s tax system simpler is that it can bump up against other policy objective. For example, it could cost money to make those policy changes - or it could unintentionally create “losers or winners” through those changes.
Summary: Bank of England governor gives downbeat view on economy
Phillip Inman
Bank of England governor Andrew Bailey gave a downbeat speech to the annual conference of the British Chambers of Commerce this morning, telling business people inflation was certain to fall, but possibly not by much before the end of the year.
He blamed the UK economic outlook, which had strengthened in recent months to put more pressure on prices.
The favourite word among City economists to describe inflation is “sticky” and Bailey Bailey avoided using it, he said there was a greater risk of his forecasts being wrong by underestimating inflationary pressures than being wrong because prices plummet.
If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required. Our commitment to the 2% inflation target is unwavering.
Asked by a member of the audience why the central bank bothered with a 2% inflation target when the consumer prices index (CPI) had remained mostly in double digits since last summer, Bailey said it was always better to have a simple, transparent basis for policymaking
The governor said he understood the pressure on business finances from higher interest rates, but it would be worse for them and households if inflation was allowed to become embedded.
Earlier this month, the Bank increased interest rates for a 12th consecutive meeting to 4.5% - the highest rate since 2008 - in an effort to bring down rampant inflation.
The most recent inflation reading was reported at 10.1% for March, ahead of market forecasts.
Bailey’s main message was that he understood the pain higher interest rates caused but there was little he could do about it. The medicine hurt some people, but made everyone fell better in the end, he seemed to say.
His comments contrasted with those of the Bank’s chief economist Huw Pill, who said last month that households and businesses “need to accept” they are poorer and stop trying to claw back their losses through pay increases and higher profit margins.
Jeremy Hunt promised business leaders he would work with them to overcome immigration barriers that prevent foreign skilled workers from filling jobs in the UK.
The chancellor told the British Chambers of Commerce (BCC) annual conference in London the government was prepared to adapt policy following discussions with business groups to tackle problems in the “short-term”.
Since we left the single market we have been pragmatic when it comes to immigration requirements. So for example, we put care homes on the shortage occupation list, some construction industry sectors, and we will keep talking to all of you about where there are short-term challenges.
But he emphasised the government’s focus was to support UK workers unable to join the labour force, citing parents excluded from taking up jobs due to the high cost of childcare and people with back problems who have taken early retirement.
Immigration has become one of the most fraught topics within the cabinet, with estimates showing net migration may have hit nearly 1m last year.
Home secretary Suella Braverman argued this week that Brits should be trained to drive trucks, work in the meat industry and gather crops as a way of easing labour shortages, rather than businesses relying on migrant labour. Her comments were seen as a rebuff to cabinet colleagues, including Hunt, who have backed easing visa rules as a way to promote economic growth.
Home secretary Suella Braverman has called for Brits to be retrained to fill labour shortages, rather than importing workers. Photograph: Sergio Azenha/Alamy
But BCC director general Shevaun Haviland has said said 80% of BCC members looking to hire staff “are facing real challenges” that could not be addressed by domestic training policies alone.
Hunt defended his handling of the economy and public finances on Wednesday, saying he had brought stability to the economic outlook and protected public investment spending.
He said independent forecasters believed the government was on track to meet Rishi Sunak’s targets of halving inflation and growing the economy, but there was “nothing automatic” about controlling rising prices:
There’s a plan, we are going to stick to it. The Bank of England has a role through monetary policy and interest rates, we support them 150% with that.
But we have our role in government, what I do on the fiscal side in terms of tax and spend has an influence and if markets judge that we are not getting our borrowing under control they will punish us with higher interest rates.
Final question for BoE governor Andrew Bailey is around central bank independence, which has been thrown into question over the past 12 months.
Bailey says he won’t comment on the politics surrounding the issue.
However, he suggests that the BoE was able to take such swift action around the LDI pensions crisis last September, and around the emergency sale of Silicon Valley Bank UK in March, precisely because it was independent.
We take these actions…rapidly and we have the tools to do it, which is part of our independence.
One audience member has asked whether there’s “any point” in having a target that the Bank of England “rarely meet,” and whether the BoE should have a “more complex mandate.”
Bailey replies that it’s important that the central bank have a “simple and transparent target” and counters the claim that the BoE have failed its current mandate.
Inflation was hovering at around 2% for most of the decade prior to Covid, he explains.
