Fuel crisis and supply shortages are a product of the UK's economic model

www.theguardian.com
5 min read
standard
Rising prices and lack of goods are what happens when just-in-time economy collides with skin-of-the-pants government
It all seems to have happened so fast. Only a few months ago, the government was congratulating itself for the speed at which Britain was emerging from the pandemic. But as the nights have lengthened, there have been empty shelves at supermarkets, spiralling energy prices and queues snaking back from petrol stations.

If there is a general sense of bemusement at all this, then there really shouldn't be. This is what happens when just-in-time production methods collide with just-in-time government and turn a problem into a crisis.

Lessons have clearly not been learned from the financial crisis of 2008. Then, it was just-in-time banking that had its fundamental weakness exposed; namely that institutions had insufficient reserves of capital to absorb losses. Now a similar problem has affected production supply chains; there is not enough slack in the system to cope with an unexpected shock.

Just-in-time supply chains were designed around lean production and minimal inventories as a way of cutting back on waste and costs. But while management consultants loved them, they really only functioned in the good times. In the case of car production, the problem was a shortage of computer chips. In the case of energy, supplies of gas could not keep up with demand – especially from Asia – as economic recoveries took hold.

No country in the world has been immune from supply bottlenecks, but Britain has suffered more than most. The reason for that is that a skin-of-the-pants approach is hardwired into the British system of governance, with an almost complete lack of planning and a messianic belief in market forces.

The lack of HGV drivers is a case in point. The haulage industry has been warning of problems for more than half a decade, telling ministers that more drivers were leaving the industry than joining it, and that the shortages…
Larry Elliott
Read full article