Yahoo Finance How BP sparked a fuel crisis in drive to ease visa rules
Scenes of cars queuing on petrol forecourts this week have triggered uncomfortable memories of Britain’s fuel crisis more than 20 years ago.
Rather than blockaded refineries, the disruption has its immediate genesis in a fateful Cabinet Office meeting nine days ago with some of Britain’s biggest companies and industry associations.
When explosive warnings from oil giant BP that a shortage of HGV drivers would force it to ration petrol station deliveries hit the front pages, anxious drivers inevitably scurried to fill up despite ministerial pleas not to do so.
Motorists’ groups are baffled by the issue being thrust into the public consciousness after a summer of low-level disruption barely registered. The timing has fuelled suspicion that the leak is more to do with low politics and a lobbying campaign for looser visa restrictions, to bring in more drivers and bring down soaring costs.
BP’s head of retail, Hannah Hofer, told the Cabinet Office taskforce call that ministers needed to understand “the urgency of the problem” as it restricts deliveries to up to 100 of its 1,200 sites. She warned that the firm had “two thirds of normal forecourt stock levels required for smooth operations” with the level “declining rapidly”.
Fewer than 20 BP forecourts have been forced to close completely and the AA’s president, Edmund King, also stressed that there is “no shortage of fuel”.
He points out that thousands of forecourts are operating normally with just a few suffering temporary supply chain problems, while demand for road fuel is still almost a tenth below pre-pandemic levels. “There have been occasional delays over recent weeks that have been managed with hardly anyone noticing. This was a manageable problem,” King says.
The problems have erupted, chiefly, because somebody leaked BP’s remarks into the public domain. As one of Britain’s biggest companies, and boasting a former head of MI6 in Sir John Sawer on its board, its words resonate.
BP sources deny being behind the leak, claiming that headlines about petrol rationing across the company’s sites are hardly in its interest.
But suspicion has nonetheless fallen on the haulage industry and the businesses it supplies, from oil companies to supermarkets. Lobby groups have spent months urging ministers to adopt a temporary visa regime for European Union drivers, to help address an estimated shortfall of 100,000 drivers in the UK.
Industry leaders have also called on the Government to put the profession on the official shortage occupation list, which would allow it to benefit from more relaxed immigration rules.For companies on the campaign trail, the BP leak has ensured maximum attention for an issue they are desperate to resolve.
“I would imagine that it was probably done to pressure the Government on the part of the hauliers,” says one source.
Another pointed the finger directly at the Road Haulage Association, which was on the call. The RHA categorically denies being the source of the leak, and points out that it has been warning over a shortfall of drivers for years due to factors such as poor working conditions.
Whatever the truth, the problem is certainly becoming more and more acute. Demand is so high that wage costs across the industry are soaring: online grocer Ocado became the latest retailer to warn of rising costs earlier this month as it set aside an extra £5m to bump up salaries.
Trade unions are also making hay after pay settlements such as a 31pc rise given to 90 drivers at Wincanton last month, raising salaries to more than £35,000 - and turning the screw on their employers. There have been reports of some drivers being offered as much as £70,000 a year.
Companies such as BP and Tesco are being forced to compete more ferociously for staff as a result, making it harder to keep shelves and pumps stocked up.
Business tycoon Gerald Ronson, who owns 275 sites operating under brands such as Esso, BP, Shell and Texaco, said: “I'm sure certain people are taking advantage of the situation. If you take some of the drivers, or the unions, they’ll ask for more money and will have to get a bit more money. They need to resolve the problem."
The problems have been intensified by the cancellation of about 45,000 HGV driving tests due to Covid, a backlog that the DVLA has only just begun to clear. Research from haulage industry body Logistics UK also suggests a shortfall of more than 13,000 EU drivers since June 2020.
The workforce is also aging, meaning companies are struggling to replace drivers who retire. The RHA says the average age of a haulier is 55, and 13pc are older than 60.
Many drivers would be forgiven for leaving the industry over their treatment after Covid hit, with many rest stops closed during the first lockdown and thousands of truckers forced to spend Christmas Day in their cabs around Dover last year when France closed the border due to fears over a new Covid variant.
The fall-out from the petrol queues looks likely to benefit the haulage industry.
The Home Office had resisted calls for immediate changes to the shortage occupation list, which is not due to be reviewed by the Migration Advisory Committee until April.
Sources pointed to the fact that parts of Europe such as Germany and Poland have an even bigger dearth of drivers than the UK, meaning that a temporary relaxation of immigration roles may not deliver the quick fix that the industry wants.
Ministers also argued against temporary visas for EU workers, insisting that it was up to the UK industry to put its own house in order and encourage new blood into the industry with better pay and conditions.
Afterall, the government insisted Britain's post-Brexit immigration overhaul was supposed to end companies' "reliance on cheap labour from Europe".
But there were signs of cracks in the dam starting to form in recent days.
Transport Secretary Grant Shapps, forced to face down warnings of a “winter of discontent” from Labour’s David Lammy on Question Time on Thursday night, called the shortages a “global problem [which] has come directly as a consequence of coronavirus”.
He added that if adding HGV drivers to the shortage occupation list “was actually the solution I’m sure we’d move to it very quickly and I don’t rule out anything”.
By yesterday morning, Shapps had pledged that “we will move heaven and earth to do whatever it takes to make sure shortages are alleviated”.
The shift came amid growing restiveness among Conservative backbenchers. Robert Halfon, a prominent Tory MP, has called for “urgent changes in terms of allowing in foreign HGV drivers”, saying that “desperate times call for desperate measures”.
That warning will surely have played on the mind of Boris Johnson, who was forced to cancel Christmas for millions of families as the second Covid wave spread. The spectre of a second festive season disrupted by potentially avoidable driver shortages and empty shelves would be too much to bear for a PM desperate to move on from the pandemic.
