Speaking to the Business, Energy and Industrial Strategy Committee on 19 October, Wright warned the UK risked returning to record rate of inflation if it didn’t take the situation more seriously.
“In hospitality, inflation is currently running between 14 and 18% – that is terrifying,” Wright explained. “I was in university in the 70s and I remember inflation going up to 27% under the Callaghan Government – We really cannot go back to that.
“It took us 15 years to recover from that. It’s terrifying for us and if the Prime Minister is - as I know he is - serious about levelling up, inflation is a bigger scourge than almost anything else, because it discriminates against the poor.”
Supply chain impact
Wright was questioned by MPs on the impact of supply chain delays on UK businesses and consumers, with a focus on the loss of choice afforded to consumers in the supermarkets.
Labour shortages were directly linked to these challenges, with Wright pointing to a 500,000-person gap in the labour market fuelling struggles along the chain. He added more data was needed to understand what was driving the shortages.
In an attempt to plug the gaps, businesses have been raising wages and offering bonuses to entice workers – Wright gave an example of one online retailer paying its workers £22 an hour for Christmas casual work and £3,000 sign-on bonuses.
“That’s great for those people, but it completely denudes that labour market for everybody else,” Wright explained. “I’ve got a member who wants 40 people for the Christmas rush, not a single person to be had.
Recovering costs
“That is also going to fuel inflation, because if he gets into the contest, he’s going to have to pay that and he’s got to recover his costs. If he’s going to recover his costs, up go the prices.”
In the absence of labour, one conclusion is to increase automation. When asked if this was the direction the industry was headed, Wright agreed and gave examples of easy wins for producers looking to adopt automated machines into their lines.
“One consequence you will see is more automation initially in the easy areas, such as packaging,” he added. “I think Government could come forward with some interesting ideas here, not necessarily simply giving us money – I don’t think Government would ever do that – but tax concessions for investment in automation would be fantastic.
“I think there are some real opportunities to use AI [artificial intelligence] in the production process – long-term this will be the solution for the more manual jobs and in some areas of butchery, where the machines learn.”
