Boris Johnson insists he isn't worried about rising prices - Next's boss thinks he should be

Watch Joel Hills' full sit-down with Lord Wolfson

This morning the prime minister set out his vision for a high wage, high-productivity economy at his party’s annual conference.

At more or less the same time, Lord Wolfson, a prominent conservative peer and an extremely successful businessman, warned there’s a risk that the UK is on the road to somewhere far less brighter.

“Labour shortages are a real problem,” the chief executive of Next told ITV News.

“When you have restaurants saying they can’t serve meals because they haven’t got the staff to open their restaurant, something is going seriously wrong in our economy.”

Businesses are struggling to recruit the people they need and Wolfson says it’s vital that they are allowed to bring in more labour from abroad.

Lord Wolfson explains what he means by 'demand-led immigration'

The government recently announced it will issue 10,500 temporary visas over the next two months.

Wolfson says that’s not enough and, if more is not done to loosen immigration controls, the real danger is not gaps on the shelves or a shortage of turkey at Christmas but that prices take off.

“If you just have more money chasing exactly the same numbers of people then there’s only one way to pay for that and that is with prices," he said.

"And we are beginning to see inflation creep into the economy. I hope it doesn’t lead to a 1970s style inflation spiral but if people believe that you can just increase wages and it will have no effect on prices then they are kidding themselves and we need to be very honest with ourselves about that,” he added.

“We all know that raising prices to increase wages doesn’t make anyone any richer, it leads to an inflationary spiral which is really dangerous.”

Lord Wolfson envisages a situation in which nothing is done to ease current labour shortages

The government sees things differently.

It has spent the last few days in Manchester explaining that the labour shortages and the empty shelves are a feature of a difficult but necessary journey from a “broken” economic model to a better one.

Companies are being openly criticised for failing to prepare for the post-Brexit transition.

Joel Hills sums up what Lord Wolfson told him: that the recruiting issues aren't about low pay, but a lack of people available

Yesterday, the prime minister said “businesses have been able to mainline low-cost migration for a very long time”.

Ministers argue that if companies increased pay and improved working conditions then their recruitment headaches will disappear.

Lord Wolfson rejects the suggestion that businesses have become addicted to cheap, foreign labour and says the problem is not low pay, its a lack of people.

Have businesses become addicted to cheap labour?

“When you have vegetable pickers being paid £1,000 a week on farms in Lincolnshire, you begin to realise this isn’t just about money,” Wolfson says.

“It’s about people available to do the work and if those people have already got better, permanent jobs then offering them more expensive seasonal work will just deprive another industry of that person.”

Some people find it astonishing that Lord Wolfson, who was a prominent supporter of Brexit, is urging government to embrace a “freer” movement of people.

Wolfson says he voted to leave the EU so the UK could have greater control of immigration not as “an excuse to pull up the drawbridge,” which he says Boris Johnson’s government has done.

Lord Wolfson on why despite voting for Brexit, he believes the 'drawbridge shouldn't have been pulled up'

He proposes that businesses should be allowed to apply for as many work visas as they need, with two conditions: foreign workers should not be paid less that British workers; and companies should pay a 7% wage surcharge tax to the Treasury.

“The idea that we can have a small group of people in Whitehall deciding how many potato diggers are needed in Lincoln and how many daffodil cutters are needed in Cornwall is patently absurd,” he told ITV News.

“Let’s stop throwing bricks at each other and arguing about this and put in an [immigration] system that settles matters once and for all,” he urges.

Lord Wolfson says the real danger is not gaps on shelves but 'a 1970s style inflation spiral'

Wolfson believes the government needs to do more to fill the vacancies which hauliers, abattoirs, farmers, factories, warehouses, builders, pubs, restaurants, hotels and care homes have been telling government for months that they can’t.

He “100% agrees” that there is no evidence so far of a wage/price spiral developing but insists that “there is a real risk of inflation becoming much more permanent than anyone thinks it will be” if the government doesn’t act.

Boris Johnson says he isn’t worried about rising prices. Lord Wolfson believes he should be.