Labour shortages could last two years warns CBI chief amid call for Government to use Budget to unlock investment

The Government has been urged to use the coming weeks to unlock spending and decision making on infrastructure and levelling amid warnings labour shortages could persist for as long as two years.

Tony Danker, director general of the CBI, told The Yorkshire Post that ministers needed to use the raft of upcoming announcements to give industry the confidence to invest to create jobs, power the economy and empower the industries of tomorrow.

Mr Danker was speaking as the Government prepares to deliver the Budget on October 27, as well as publish the Integrated Rail Review, the Comprehensive Spending Review and the Levelling Up white paper.

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Saying that now was a time for ‘actions not words’ he urged ministers to be bold and announce ‘big bets that deliver big growth’ and insisted that delivery of transport infrastructure improvements, decarbonisation schemes and genuine levelling up policies would be key to this.

CBI director general Tony Danker

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Speaking exclusively to this newspaper, Mr Danker said: “We need to be going for growth.

“We can’t do what happened in 2008 which was we became obsessed with the short run, we became obsessed with politics.

“We have been talking about infrastructure, we have been talking about levelling up, we have been talking about decarbonisation - we have been talking about these things for a long time but they are, as yet, locked and they need to be unlocked.

Shortages are impacting the economy.

Transport in the north is definitely one of them, the decarbonisation of our economy - big bets around hydrogen and carbon capture and storage - we need to hear about those things.”

Mr Danker said there was a great deal of private money ready to be invested among the nation’s business community but that the confidence for this cash to be invested needed to be engendered by commitments on public spending, particularly around which projects will be given the go ahead.

“We need less consultations and more decisions - that’s what the next few weeks need to be about and I heard that exact message from Yorkshire business as I have heard across the country,” Mr Danker said.

“The Prime Minister is not wrong to say what we are seeing is bumps in the road as global demand comes back on stream.

Infrastructure key to investment decisions said the CBI boss.

“But I don’t see why that means we put on hold the plan for growth. I think we need to double down this plan for growth.

“We need actions not words.”

The CBI chief’s comments come as the UK economy grapples with shortages of both goods and labour as demand soars following the easing of restrictions after the pandemic.

On the latter, Mr Danker had a sobering forecast.

Rishi Sunak will deliver the Budget later this month.

“Labour shortages are not just for Christmas,” he said.

“We think they are going to go way beyond two months and many of them will be two years.

“The transition from an economy that utilised skills from elsewhere to one that is more self-sufficient from a labour point of view - the idea that happens overnight or because you put up wages, it doesn’t stand true.

“It’s fine for Government to talk about immigration and wages, but if they don’t then have a plan around skills then we are not going to have a smooth transition, we are going to have a bumpy transition and we are going to spent the next year tackling crises rather than getting the economy growing again.”

When asked what made him optimistic about the economy's future, Mr Danker replied: "Visiting Yorkshire."

He added: "When I look at what is happening in Leeds, when I look at Channel 4 moving to leads and what a story that is.

"When I look at what is going on on the Humber in terms of green opportunities and the ports doing well.

"I think that is incredibly optimistic."

A HMT spokesperson said: “We’ve backed businesses throughout the pandemic through our Plan for Jobs – and it’s working, with GDP recovering quickly, unemployment falling and the number of people on payrolls back up to pre-pandemic levels.

“We’re also unlocking investment through the £20 billion a year super deduction, the biggest two-year business tax cut in modern British history, while £650 billion of private and public infrastructure investment will support 425,000 jobs over the next four years.

“On top of this our new freeports and the innovative UK infrastructure bank will help attract and harness private investment as well as fund new projects.”