Nadhim Zahawi desperately tries to cool business fury at PM

Nadhim Zahawi today desperately tried to cool business fury with the PM for turning them into the 'bogeyman' over wages and supply chain chaos.

The Education Secretary pleaded with firms to 'work together' with the government despite Boris Johnson saying it was 'not his job' to fix all their problems.

In his Conservative Party conference speech yesterday, the premier admitted the process of reshaping the economy to one with less immigration and better wages will be 'difficult'.

But he insisted he will not change course as he accused bosses of using cheap labour as 'an excuse' not to invest in their company or staff.

Business leaders have hit back warning that 'tough rhetoric' against the private sector will do nothing to solve the problems.

Richard Walker, managing director of the Iceland supermarket chain, told BBC Radio 4's Today programme: 'Business is dealing with so much and so many different crises which has all compounded at once. So, pointing the finger and choosing us as the bogeymen for issues such as HGV driver shortages – which is multifaceted and systemic – is simply not helpful.'

Mr Walker said it is 'inevitable' that there will be price rises as businesses face multiple 'cost pressures'.

He said: 'I think at the moment, all of these cost pressures are coming just at a time where they'll (the Government) be withdrawing the £20 Universal Credit allowance, which some of our customers really rely on. So, yes, I think it's kind of a double-ended problem, and it's inevitable that we will see price rises.

'The UK supermarket industry is one of the most competitive in the world. Our margins are very, very tight and we're not an endless sponge that can just absorb all of these different cost increases.'

Pressed on Sky News whether the Tories were 'on a warpath with business', mr Zahawi said: 'Well, I don't agree with you.'

Mr Zahawi - who himself is an entrepreneur who founded polling firm YouGov - said: 'What I would say to everybody is look, let's work together.

'We have seen retailers who invested in technology and have done really well. Others like Topshop and Topman didn't make that investment and haven't done so well.

'We've seen SMEs take advantage (of) £100billion of grants and loans to support SMEs. That is what this Government is doing to help business.

'Let's do this together. Let's produce that high wage, high skill economy, because it is doable.'

Speaking yesterday at the conference, in Manchester, Mr Johnson said: 'That's the direction in which the country is going now – towards a high-wage, high-skilled, high-productivity and, yes, thereby a low-tax economy. 

'That is what the people of this country need and deserve,' the Prime Minister said.

'Yes, it will take time, and sometimes it will be difficult, but that is the change that people voted for in 2016.'

But he faced a tsunami of criticism from the private sector which accused him of indulging in 'anti-business rhetoric' and 'playing the blame game'.

The Confederation of British Industry (CBI) warned the economy is at a 'fragile moment' with the risk of inflation becoming a problem. 

Director general Tony Danker said: 'The Prime Minister has set out a compelling vision for our economy: High wages, high skills, high investment and high growth.

'But the PM has only stated his ambition on wages. This needs to be backed up by action on skills, on investment and on productivity. 

'Ambition on wages without action on investment and productivity is ultimately just a pathway for higher prices.'

Shevaun Haviland of the British Chambers of Commerce said a change to a high-wage economy 'will not happen overnight'. 

'There is much in the Prime Minister's ambition for the future of the United Kingdom which should be rightly applauded, but what businesses urgently need are answers to the problems they are facing in the here and now,' she said.

Mark Littlewood of the Institute of Economic Affairs said: 'Unnecessarily restricting the supply of labour may lead to wage increases, but these will be passed on in price increases. 

'A strategy to make things more expensive will not create a genuinely high-wage economy, merely the illusion of one.'

Ahead of the speech, the boss of high street chain Next warned there is 'real panic and despondency' over labour shortages in sectors of the economy.

Lord Wolfson, who backed Brexit, said suggestions big business needs a shock were wrong. 

Mr Johnson meanwhile faced a backlash from Brexit-supporting business leaders, who accused him of treating them like 'the bogeyman' over labour shortages. 

Meanwhile, Tim Martin, the boss of pub chain JD Wetherspoon, who was a staunch supporter of Brexit in the run-up to the referendum, also warned about the impact of changes to migration on businesses such as his.

He told the Times: 'Brexit decided that immigration policy should be decided by those we've elected, not what the policy should be.

'The UK now needs an intelligent debate as to the details of the policy.'

Mr Johnson's address to the Tory party conference yesterday came amid an increasingly grim economic backdrop, with warnings that more energy suppliers face going bust as natural gas costs spiked by another 40 per cent.

The UK government's borrowing costs rose to the highest level since May 2019 yesterday, as markets took fright at the prospect of inflation going even higher. 

In further worrying signs, the latest PMI figures suggested the economic recovery stalled last month - raising the threat of so-called 'stagflation'.    

Meanwhile, the CBI warned that the premier's determination to drive up wages would put the country on a 'pathway to higher prices' unless he has comes up with a way to boost productivity.   

Matthew Lesh of Thatcherite think-tank the Adam Smith institute said: 'Boris' rhetoric was bombastic but vacuous and economically illiterate. 

'Boris is hamstringing the labour market, raising taxes on a fragile economy and shying away from meaningful planning reform. Shortages and rising prices cannot simply be blustered away with rhetoric about migrants.' 

In the only crumb of policy today, Mr Johnson announced a £3,000 'Levelling Up' premium for talented maths physics chemistry teachers to go and work in deprived areas. 

He did try to soothe anxiety in Tory ranks by saying he wanted there to be 'low tax' in the longer term, as well as promising not to 'jam' homes in the South East and to fight 'woke' historical revisionism. 

But the PM is facing growing unrest over his blunt denial that the country is in 'crisis' with petrol stations running dry, spiking inflation and labour shortages. 

Amid warnings that millions of families with struggle to make ends meet this Christmas, he has argued it is 'not his job' to 'fix' all the problems for industry. 

Mr Johnson also defended his decision to create a new health and social care levy during his speech yesterday, as he said he believes helping the NHS is the top priority of the British people.

Mr Johnson pointed to the damage done by the coronavirus crisis to the national coffers as he said 'Margaret Thatcher would not have ignored the meteorite that has just crashed through the public finances'.

He said the Tories' plans for the NHS will see 48 new hospitals built and 50,000 more nurses recruited.

He said the Government's social care plan will help to better link up the health service and the social care system.

Mr Johnson insisted the extra cash raised by his £12billion a year tax raid will be spent on frontline services and 'not on needless bureaucracy'.

He said that his government is tackling the big issues like social care reform as he claimed past administrations had not had the 'guts' to.

He also pushed his 'Levelling Up' agenda.

Mr Johnson said in some areas the UK is one of the most imbalanced developed nations as he pointed to regional discrepancies on metrics like life expectancy.

He said those differences amounted to an 'appalling waste of potential' and insisted there is no reason why people should be 'geographically fated' to be poorer or less healthy than their counterparts elsewhere in the UK.

Mr Johnson said his 'levelling up' agenda is the 'right and responsible policy' to deal with those issues.

Helping 'left behind' areas would also help to reduce pressure on the 'overheating' south east of England, he said.

The Prime Minister said that his Government will 'promote opportunity with every tool we have'.

The single policy announcement contained in the speech related to 'levelling up' as the PM announced a new 'levelling up premium'.

It will see high-flying maths and science teachers offered a grant of up to £3,000 to work in areas of the country which need them the most.

While the reception was warm inside the Tory party conference, outside millions were left facing a looming winter energy crisis, with experts warning that gas and electricity bills will surge by at least £500 a year. 

Soaring energy costs saw gas prices rising by a staggering 37 per cent in a single day and pushing more energy firms to the brink of collapse while the National Grid warned of electricity shortages as the country faces its worst crisis since the first Covid outbreak last year.

Rising inflation driven by labour shortages, growing energy costs, a lack of HGV drivers and gaps in global supply chains are contributing to the problem, as it was revealed hard-pressed families face paying £1,700 more for energy in April and an extra £1,800 for other essentials by Christmas.