* UK not heading back to 1970s - minister says
* Supermarkets warn of panic buying
* BoE see inflation rising above 4%
* Drax may keep coal plants operating
* UK says: we won't bail out failed companies
(Adds BP)
By Guy Faulconbridge, James Davey and Kate Holton
LONDON, Sept 23 (Reuters) - Consumers should not panic buy
products as Britain is not heading back into a 1970s-style
"winter of discontent" of strikes and power shortages, a junior
minister said on Thursday.
Soaring wholesale European natural gas prices have sent
shockwaves through energy, chemicals and steel producers, and
strained supply chains which were already creaking due to a
shortage of labour and the tumult of Brexit.
After gas prices triggered a carbon dioxide shortage,
Britain was forced to extend emergency state support to avert a
shortage of poultry and meat.
Tesco, Britain's biggest supermarket group, told
government officials last week the shortage of truck drivers
would lead to panic-buying in the run-up to Christmas if action
was not taken.
Supermarket shelves of carbonated drinks and water were left
empty in some places and turkey producers have warned that
families could be left without their traditional turkey lunch at
Christmas if the carbon dioxide shortage continues.
In a further sign of worsening supply chain dislocation, BP
temporarily closed some of its UK petrol forecourt sites
due to a lack of both unleaded and diesel grades, which it
blamed on driver shortages.
"There is no need for people to go out and panic buy," Small
Business Minister Paul Scully told Times Radio.
"Look, this isn't a 1970s thing at all," he said when asked
if Britain was heading back into a winter of discontent - a
reference to the 1978-79 winter when inflation and industrial
action left the economy in chaos.
The Bank of England said inflation would temporarily rise
above 4% for the first time in a decade later this year, largely
due to energy and goods prices.
A Tesco spokesperson said the group currently had good
availability though it said the shortage of HGV drivers has led
to "some distribution challenges".
A spokesperson for No. 2 player Sainsbury’s said
"availability in some product categories may vary but
alternatives are available".
Supermarkets and farmers have called on Britain to ease
shortages of labour in key areas - particularly of truckers,
processing and picking - which have strained the food supply
chain.
LABOUR CRUNCH
The trucking industry needs another 90,000 drivers to meet
demand after Brexit made it harder for European workers to drive
in Britain and the pandemic prevented new workers from
qualifying.
"My business has about 100 HGV drivers short, and that is
making it increasingly very, very difficult to service our
shops," said Richard Walker, managing director at supermarket
Iceland, adding that deliveries were being cancelled.
"It is a concern and as we look to build stock as an
industry, to work towards our bumper time of year, Christmas,
we're now facing this shortage at the worst possible time. I am
worried."
The National Farmers' Union has written to Prime Minister
Boris Johnson asking him to urgently introduce a new visa system
to help tackle labour shortages across the supply chain.
COAL POWER?
The rise in natural gas prices is adding to the sense of
chaos. Six energy suppliers have gone out of business this
month, leaving nearly 1.5 million customers facing a rise in
bills.
Just over a month before Johnson hosts world leaders at a
United Nations climate conference, known as COP26, power
generator Drax Group Plc said it could keep its
coal-fired power plants operating beyond their planned closure
next year.
Britain is having talks with the energy regulator Ofgem
about whether or not a cap on gas and electricity prices for
consumers may have to go up, Scully said.
The cap was brought in to stop energy companies gouging
consumers but has now turned their businesses unprofitable as it
is below the wholesale price.
Business Secretary Kwasi Kwarteng told parliament the
government would not bail out failed energy companies and would
not be offer grants or subsidies to larger energy companies.
(Reporting by Guy Faulconbridge, Kate Holton and James Davey;
editing by Angus MacSwan and Elaine Hardcastle)