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Home / In Brief / In Brief: Supply crisis illustrated, Economic downturn ahead, Tory splits, What if…

In Brief: Supply crisis illustrated, Economic downturn ahead, Tory splits, What if…

Supply crisis illustrated

When you have spent three decades creating hyper-efficient, just-in-time supply chains, you mess with them at your peril.  This is because they are also hyper-fragile, so that when backlogs occur, the result is a systemic failure rather than a single short-term blockage.  Not only do you have to throw money – a proxy for energy and resources – at the immediate point of shortage, you have to expand the entire supply chain if you want to maintain normal supply while also clearing the backlog.

Unfortunately, this is not how our political leaders, or the “experts” who advise them, view the problem.  For the most part, they only respond when a symptom of failing supply chains becomes so obvious that the public begins to notice.  So, for example, while Britain has had a growing shortage of HGV drivers for the best part of 20 years, it is only due to the post-lockdown need to clear supply chain backlogs that the driver shortage has become apparent.

Predictably, the response of businesses and government has been to throw money at the symptom rather than the cause.  As Tom Espiner at the BBC reports this morning:

“The government has announced it is boosting the number of places available on its skills scheme to try to address a chronic shortage of lorry drivers.

“It has increased funding for its HGV Skills Bootcamps from £17m to £34m, allowing them to offer 11,000 places instead of 5,000.”

As Espiner notes however, HGV training providers are now fully booked, and so cannot provide the additional training places even if they wanted to.  And this is not an area where theoretical supply and demand might ride to the rescue:

“There is no shortage of instructors at the moment, but there is a shortage of available lorries to train people in, says [training provider] Mr Moon…  Normally, he orders new lorries straight from DAF – but if he ordered one today, he says he would be unlikely to get it before 2023.

“’It’s mainly to do with Covid,’ he says, with manufacturers having problems getting parts and ‘getting trucks built and out the other end’ of factories.”

To train enough new drivers requires additional lorries which, in turn, means expanding the capacity of the manufacturers of all of the components needed to produce them.  And even when – theoretically, because it isn’t going to happen in real life – these parts of the supply chain have been expanded, you still have to get the parts onto ships – the ones that cannot be unloaded because there aren’t enough HGV drivers – and later onto the very lorries that need to be assembled.

In a healthy economy, the various firms involved would cobble together some kind of solution in time.  But this economy hasn’t been healthy since at least 2008.  And we have yet to fully understand the additional damage wrought by the response to the pandemic.

Economic downturn ahead

It seems so long ago that UK Chancellor, Rishi Sunak was promising a post-covid boom on the scale of the post-war boom of the 1950s.  Apparently without crossing his fingers behind his back, Sunak predicted growth of seven percent or more as the UK economy bounced back from lockdown. 

Were this merely one of those rash predictions used to raise morale, it might have been excusable.  But Sunak’s package of new taxes and public spending cuts were based on that anticipated growth.  With food, fuel and utility prices spiralling upward, the government will need a high level of growth to placate an increasingly restless UK electorate.

Unfortunately, the latest UK growth figure of just 0.1 percent for October is a long way short of what was needed, and is in line with some of the anecdotal evidence of a stalling economy recorded by citizen journalists.  Indeed, far from a post-war boom, the economy as a whole has yet to return to pre-pandemic levels:

The situation is actually worse than the headline figure suggests, as much of the growth has been in services which responded to the reopening of the economy after the prolonged lockdown.  Key sectors where growth might drive an economic recovery actually declined over the period:

“Overall, production grew by 0.5% in the three months to October 2021, with a 25.5% growth in mining and quarrying and a 0.7% increase in water supply. These increases were partially offset by a fall of 6.2% in electricity, gas, steam and air conditioning supply and a fall of 0.1% in manufacturing.”

Businesses are already feeling the effects of rising energy costs and supply chain shortages.  And for the moment, these are being passed onto consumers through shrinkflation and higher prices.  This will be unsustainable as households are forced to pay a greater part of their income on fuel, heating and lighting during the winter months.  And in April, this will be followed up with another steep increase in domestic gas and electricity prices even as national and local tax increases begin to bite.

Tory splits

The Tory love-hate affair with Prime Minister, Boris Johnson, took another spin this week via the self-inflicted Christmas party scandal.  It is a fairly open secret that the Tories don’t particularly like Johnson, and that many among the more neoliberal Tories never thought that he was fit to be a Prime Minister.  On the other hand, faced with the prospect of defeat at the hands of Jeremy Corbyn’s Labour Party in 2019, they set aside these concerns in favour of backing the only leadership contender who offered a clear path to electoral victory.

That victory was duly delivered in December 2019.  However, it brought with it an even bigger problem, because the capture of Labour’s “red wall” brought a new intake of working class Tory MPs onto the Tory backbenches.  And this “Northern Research Group” are not about to meekly return to their former day jobs in the event that Johnson messes up and hands his majority to the opposition parties.  One consequence is that the government is under pressure from its own back benches to actually deliver on its “levelling up” rhetoric and to push through a raft of socially conservative policies on such things as law and order and immigration control.

To make matters worse for the neoliberal, austerity-minded Tories in the south, the further they sink in the polls as a result of Johnson’s cavalier leadership, the greater the risk that Labour and the LibDems can take seats from them across the southern “blue wall.”

For the moment, neoliberal Tories are gravitating toward Chancellor Sunak as a possible replacement for Johnson, while the red wall Tories favour Foreign Secretary Liz Truss – holding out the prospect of the UK’s and the Tories’ third woman Prime Minister.  But neither side is about to launch a leadership challenge for fear that the other might win.  Moreover, the history of the Tory Party shows that they never reward the individual who forces the resignation or defeat of a leader.

Adding to the muddle is the fact that Johnson remains far more popular than Labour leader, Keir Starmer.  Moreover, since the recent scandals involve personal wrongdoing rather than policy, when it comes to a general election, Johnson may very well wipe the floor with his opponents.  The Tories would no doubt drop Johnson like a hot potato – as they did with Thatcher 32 years ago – in the event that his poll ratings crash.  But so long as he looks like a winner, and despite the current baying for blood among the establishment media, they will likely stick with him… for now at least.

What if…

The establishment media and the opposition parties have decided that the scandal behind the Downing Street Christmas parties last year is that it proved that there is one law for us and a different one for them.  This was compounded by the police decision not to investigate the Downing Street parties even as ordinary folk were being hauled through the courts for doing the same thing.

There is though, an alternative interpretation that might be made here.  We have long known that Covid is not as serious as the media and the political class have encouraged us to believe.  If any group of people is going to be aware of the risk from covid, it is surely the people working within the very centre of government in 10 Downing Street.  And they are no more likely than the rest of us to want to take a dose of covid back to granny by frivolously partying when the official position was that we should avoid social contact outside our respective “bubbles.”

This is not to deny that covid is serious or that it continues to present a risk to older and vulnerable people, even after three doses of vaccine.  But might their behaviour – along with that of former government scientist Neil Ferguson, Dominic Cummings, Matt Hancock, et al. – suggest that we have been the victims of excessive scaremongering?  At the very least, you would expect at least one curious mainstream journalist to ask whether we should believe their words or their actions.

As you made it to the end…

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