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“This might be worse than Covid”: Shevaun Haviland on why businesses need help to survive inflation

The director-general of the British Chambers of Commerce says Andrew Bailey told her inflation would be “fine by September”.

By Emma Haslett

When Shevaun Haviland joined the British Chambers of Commerce (BCC) in May last year, becoming the first female director-general in the organisation’s 161-year history, she was hoping for “sunlit uplands” as the UK recovered from Covid. Instead, as lockdowns eased and businesses returned to full capacity, she began to hear worrying reports from her members: shipping costs were going “through the roof”, they told her, while recruitment was becoming increasingly difficult.

At her first meeting with Andrew Bailey, the governor of the Bank of England, in June 2021, she passed on those concerns. “I said, governor, we’re hearing from our businesses about really big increases in the cost of raw materials, and they’re quite concerned with it. And he said, don’t worry about that – it’s just choppiness in the supply chain, it’ll be fine by September.” What Haviland had heard from her members told her otherwise. “I said, to be honest with you, we don’t think it’s going to be fine by September.”

It was not fine by September. Instead, inflation began to climb as the cost of materials increased, while hiring became increasingly difficult for the 80,000 businesses that made up the BCC’s membership, and UK unemployment continued its steady fall, hitting a 50-year low in the first quarter of this year. Then Russia invaded Ukraine, and price rises accelerated even more as the cost of energy jumped. In April, inflation in the UK hit 9 per cent, a 40-year high.

Businesses feel price changes first, and often have have less protection from them: one BCC member, a manufacturer in the north-west, reported to Haviland that his energy bills had risen from £140,000 a year to £706,000. Another, a carbon manufacturer in Inverness, said he was paying £11m a year, up from £4.6m. There’s a sense that when the BCC speaks, those tasked with running the country – including Bailey – should listen attentively. “We are the canary in the coal mine,” she said.

For Haviland, who came to the role after five years in the civil service – first as deputy director of business parternships in the Cabinet Office during Theresa May’s premiership, then focusing on business relations at No 10 – firefighting was a familiar feeling. For May, “the political environment meant she had terrible time… nowhere to go, no leeway”. Meanwhile, when Johnson won the general election, “people in the civil service were like, this is great, [he has a] huge majority… we can really get some things done.” Then Covid arrived. By the end of her tenure in the public sector, Haviland had experienced “three prime ministers, two general elections, an EU referendum, an actual EU exit and a year of global pandemic”.

Haviland spent the pandemic driving from her home in Chiswick, where she lived with her husband and two teenage sons, to the Cabinet Office, a journey that took just 15 minutes (although she said it felt like a disaster movie). There, she saw first-hand how the government mobilised to save businesses. In her new role, businesses were showing their appreciation for that. One member told her: “When you see the Chancellor next, thank him for me. He kept my business alive through Covid.”

But with spiralling inflation, the cost of borrowing rising and recruitment getting harder, Haviland was concerned the government had stopped listening. She had spent the past few weeks arguing for an emergency budget, her calm but dogged insistence contrasting awkwardly with the attitudes of government figures such as Michael Gove, the minister for levelling up, who, when asked about it on the BBC, appeared to panic, before running the full gamut of odd regional accents and telling his interviewer to “calm down” in a strange Scouse twang. Why was the government resisting so hard?

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“I think they [the Prime Minister and the Chancellor] want to get back to what they see as normal, which is a Conservative government not intervening in the economy,” she said. “But what we’re saying to the Chancellor is: it’s not normal. It’s not business as usual. One of our members said to me the other week that this might be worse than Covid.”

“This government is great at engagement – I meet the Business Secretary every Monday afternoon, I see the Chancellor every couple of months,” she said. “[But] we need more of a plan, we need more of a strategy.”

As is the way of former civil servants, she was deeply diplomatic, praising Gove’s “big brain” and calling May an “incredible public servant”. Rishi Sunak came in for a bit of flack – “we pushed quite hard for him not to raise national insurance in April, and I think it was probably a mistake that he went down that path” – but she gave him the chance to exonerate himself: “[He] can reverse it, it’s not too late.” Even Bailey got a second chance. “He believed that supply chains would sort themselves out.” The one subject on which she was uncompromising was Brexit.

“Brexit has been a massive challenge for our members, especially those who export – the paperwork, time delays,” she said. “A number of them have absorbed that and got used to it.” But the UK was suffering. “We’re down as a nation when the rest of the world is actually up on trade.”

Haviland might not have expected her first year to be as fraught as it has been, but she seemed to have accepted her fate. She had spent the past four weeks travelling – “Dundee, Inverness, Fife, Aberdeen, Plymouth, Chelmsford and Grimsby” – and said that what struck her the most was businesses’ resilience. “They talk you through this tsunami of cost that they’re facing, but they continue to be optimistic and forward-looking and can-do,” she said. “It’s just amazing. It’s inspirational.”

[See also: Five ways the government failed to shield the UK from inflation]

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