has warned that commercial centres risk becoming "ghost towns" if offices don't reopen soon.
They are already. Ever been in one of them city centres where people only work and have lunch? They are ghost towns after nightfall alright.
In what could be seen as a traditionally British two fingers towards the government's plea for employees to return to their places of work, UK outsourcing firm Capita appears set to close a third of its office space permanently. The major government contractor is ending leases on almost 100 workplaces as employees' shift to …
One of the joys of living next to the city of London and working further out, was walking along the deserted streets at night. The Lloyds building's lights made a great romantic background on a warm summers night, walking back from the Water Rats.
Downntown LA? Not so much:)
Been seeing quite a lot of that for some time where we are.
Business rates and property prices getting hiked up in the "popular" districts driving local business to the wall or out to elsewhere to be replaced by generic, high-street brands. People can't afford to live there so they move out to the districts, leaving offices unlet. Then the centres rot from the inside out. Parking is expensive/scarce so people go to the out-of-town malls to shop.
This latest trend has just accelerated that. Louis Rossman has been talking about a lot of this on YouTube on some of his more recent videos in NYC. The kinds of business rental rates is unrealistic considering the current business climate there.
You can see why few people actually *want* to return to a company office. And why most companies don't want them to, either.
In London, office space is piggin' expensive. The basic rent in the centre satrts at about £50 per square foot per year and can be double that in an area that is actually pleasant to work in. Add business rates and service charges and the price goes up to £80, at least.
Just a basic desk + chair and cat-swinging space is said to be 95 sq.ft. ('pollies for the old-fashioned units) so it costs at least £8k for each desk.
I doubt that anyone is so naive to think that saving would be passed on to employees as a pay rise. However, it might just stave off the time when administrative staff become so expensive that it is cheaper to replace them with an automated system.
Your pay rise is saving the money on commuting plus the hours you get back.
If I was unfortunate enough to be working in a London office that would be a massive raise. As it happens, I'm personally saving nothing like that because I don't work in London. All I've got is a car that I don't need but has years left on PCP.
Strap in though, after saving money on office space, expect the next thing to be employers expecting "premium London wages" to take a smackdown causing people to try to relocate to the far flung corners of the country/galaxy to save some cash.
Might be genuinely what the country needs to spread the wealth from London though.
I reckon my total saving is well beyond the £8k/year ... For starters there's a £3k saving on my railcard right off the bat (granted, this does mean I need to buy tickets on the few occasions I do go into London, but it's so infrequent as to not even count.
Then there's the ~4 hours/day commute for what, 250 odd days per year which counts for 1000 hours saved - so that's (at average rates) £14,800 [according to the average hourly rates posted here
So overall, I'd say I'm getting much more out of the WFH deal than my employer is saving, so definitely a win there.
But soon the employer will be wondering why they need to pay you a salary based on the £8K commuting costs you no longer have to pay, while you work from your home.
Next they'll be wondering why they are paying you a salary based on expensive homes in the south east when you or someone else could be working from home somewhere cheaper in the north of England.
After that they'll be wondering why they are paying a salary based on someone living in the UK, when someone else could be working from home in a much cheaper country.
"But soon the employer will be wondering why they need to pay you a salary based on the £8K commuting costs you no longer have to pay, while you work from your home."
In other parts of the world (ahem*netherlands*ahem), travel costs are ADDITIONAL to salaries.
They don't quite go as far as paying your travel time but I can see that coming
Is London weighting still a thing? We haven't had it for ages.Salary is irrelevant of location. Mostly only our grads and early careers choose to live in London in recent years, most older folks commute in from the Thames Valley, South Coast, even Manchester and Scotland.
London weighting isn't an actual textbook thing (except maybe in some dinosaur companies) but salaries for roles in central London are higher than those equivalent roles elsewhere.
Moving your operation that you can't offshore to somewhere as cheap as possible onshore was the final hurdle in cost reduction.
Can go spectacularly wrong though when you discover the number of available CCIE's in *insert rural backwater* is actually zero.
Guess that's all gone by the by though now.
Agreed. In fact my company has a big problem, in that in the last survey, more than 80% of employees have so far indicated they don't want to work from the office ever again.
The only ones who seem keen to go back to the office, are single people stuck alone in tiny flats. Before we did have a contingent of people stuck at home with the kids, who didn't have anywhere quiet to set up a work office, but with the kids going back to school, even they are now happy with the WFH arrangement.
Reasons that have been given to WFH (apart from the obvious savings in commute costs, car wear and tear, etc...) is better work life balance, a reduction in tiredness (no need to wake up at 6am, 5 days a week, to cram during rush hour to get to office for 9am), people even having less domestic flare ups with partners, and having more time to spend with kids/family. Even healtheir living, people eat better, go for lunch walks, have more energy to exercise, etc... It has generally been a really positive development all round.
In theory it should be cheaper for the company as well, as they don't have to deal with office squabbles, the costs of heating/leases, employee food/drinks/perks, etc... However in many cases, the problem is the company has committed to many years of leases etc.. ahead of time, for office space that is now just empty. That is an ongoing cost, whether it is used or not. At the same time they will have had to invest a lot more to beef up their VPN/video conference systems (before they were used by only 10% of the company at a time, but now 100% of the company use it all the time).
It is definitely a drastic change, especially as most companies did it without any planning. It was an emergency, and now we are seeing some companies adapt and offer such remote work setups permanently, while others are too stuck in their ways, and are just waiting for things to "return to normal", and have everyone crammed in the office as before. Time will tell if this "remote office" becomes the norm, or just an aberration that will be rectified within a year or so.
I personally hope its the former, but I think a lot of companies are hoping its the latter.
The employee happier, employer has less costs, more resources to devote to doing stuff instead of the transport of people to cubicles? Yes there will be a loss from the transporters and services for employees out of the home but less travel is less Co2, less fossil fuel for transport less litter.
With over 8 million people in the UK living in unaffordable or unsuitable housing along with growing numbers of homeless, perhaps the empty office space could be gadually integrated into the housing stock?
There has been a huge shortfall of affordable housing since the war, every successive government has promised to do something about it and none of them have.
Thatcher's idea of 'Right to buy' might have been useful if the money from sold houses was put directly back into building more affordable housing but she made sure that wouldn't happen.
Be careful what you wish for, reusing offices as housing. A cunning wheeze doing the rounds at the moment is to take a disused office block, refit the insides as a collection of bedsits, and then fill it with people the council would like off their housing list. Bonus points if it's sited a long way away, when any problem tenants are suddenly no longer your problem. Google Templefields House in Harlow, and the London councils using it, for more information.
Why so cunning? Doing things this way means that the building doesn't have to conform to the same fire codes, or regulations on size of dwelling, as a new-built housing block. Which makes it much much cheaper. Which increases the profits to the landlord.
And many office blocks are out-of-town, with limited access to shops or public transport links (especially at evenings and weekends). But then the developer doesn't have to live there.
As with everything, there's a trade-off.
Certainly on the environmental level, it's a clear win: less travelling, less pollution. There's even some secondary benefits at the city level: fewer traffic jams and less wear and tear on central infrastructure.
And at an individual level, if you're not travelling to work, then you're saving time and (unless you walk to work every day) money. And again, if you commute in a car, then you're putting less wear and tear on it.
But at the same time...
If fewer people are travelling, then that has an impact on public transport infrastructure - e.g. fewer buses and/or trains will run. And that not only means job losses, but has a disproportionate effect on lower-income people who don't have access to private transport.
If fewer people are working in a central office, then that means there's less demand for secondary industries to support them - e.g. sandwich shops, caterers, etc.
And similarly, if fewer people are in the city centre when they finish working for the day, then they're much less likely to want to go out for drinks or meals. So there's a further hit to the hospitality industry.
And both of the above support secondary industries - e.g. the people who grow the produce they server, and the people who deliver it.
Not to mention the secondary office industries, such as cleaning and security staff.
There's also the mental-health costs - social media and video conferencing only go so far as substitutes for in-person conversations, and there's fewer opportunities to meet new people. I know a few people who are worried about the toll that isolation is having on both their mental health and their ability to interact with other people.
And we're in the UK, which the dubious claim of having the smallest homes in Europe[*]. Which makes it even harder to have a dedicated workspare, especially if you have a family. Which in turn impacts mental health.
And then there's the cost of working from home - e.g. heating. I know it's offset for some people by the reduction in commuting costs, and some companies are happy to pay something towards your costs - and you can claim some money back from the IRS relatively easily.
So, yeah. Great for the environment. Great for the companies, who can cut down their cost base.
Otherwise, not so much.
Still, at least some of the above will have relatively short-term impact, and we'll learn to adjust and move to new economic models in the same way as buggy-whip makers did. But there's going to be a lot of pain for a lot of people along the way.
Then too, it's even possible that this could lead to something of a rennaisance for cities: with buildings being released from commercial and/or "student accommodation", we could actually see properties being refurbished and turned into housing, which would then get people moving back into central areas and thereby revitalising at least some of the hospitality industry which has just been decimated.
But I'm not holding my breath on that one!
[***] Personal bug-bear; around these 'ere parts, I'm fairly sure there's more "student" accommodation than non-student, thanks to the fact that they're not classed as housing and can therefore be built cheaply...
"And we're in the UK, which the dubious claim of having the smallest homes in Europe[*]. "
Sadly so. Possibly because in the UK the housing market is focussed on the number of bedrooms. In other European countries they tend to look more at the number of square metres.
Another thing you notice when comparing UK and, say, NL houses is that in the UK the windows tend to be very small. According to a construction industry friend of mine that's because brickwork costs less per square metre than windows :(. And I think there's some security mark which also favours small windows :(.
But are we discussing house sizes, or home sizes? The article referred to says that the average UK house size is 88m², against a recommended 93m². Compare that to France where the average home size is 91m², taken from an average house size of 112m² and an average apartment of 63m². A larger proportion of the UK population lives in houses rather than apartments, which would tend toward smaller house sizes for single-person households.
As you say, it's likely to only be a temporary restructuring...
People will still eat, producers of foods aren't going to be affected at all by you eating in a different location. Entertainment venues will spread out as there's no reason you can't go out near where you live instead of near where you work. The other advantage is that going out near your residence makes it easy to walk home, less temptation for drink driving to avoid expensive late night taxi rides.
There is a severe shortage of housing in the uk, and everyone having both a home and a workplace is a terribly inefficient use of space. Repurposing a lot of office space into residential will lead to more efficient use of the space.
The student housing is likely to decrease if more people study remotely too.
Heating you only need during the winter, and keeping your home at a reasonable temperature 24/7 probably won't cost that much more than letting it go cold during the day and then heating it back up in the evening. Aside from this, everyone's temperature preference is different - it's common for people to find the temperature of their workplaces uncomfortable, at home you can have a temperature which suits you.
>keeping your home at a reasonable temperature 24/7 probably won't cost that much more than letting it go cold during the day and then heating it back up in the evening.
My son has discovered that an Xbox One, if used for a few hours with the window and door closed can comfortably heat his bedroom to a temperature that is significantly warmer than the rest of the house...
"keeping your home at a reasonable temperature 24/7 probably won't cost that much more than letting it go cold during the day and then heating it back up in the evening."
It costs less - a lot less. Letting your building fabric get cold is a spectacularly bad idea (mould and damp amongst other issues)
Simply switching my ancient system from a timer+thermostat to timezoned thermostat (£70) and leaving the system on 24*7 knocked 30% off my bills 16 years ago (lower temp during the day and overnight, higher temp during occupancy periods)
Adding basic thermostatic rad valves to stop individual rooms overheating knocked another 25% off that (£16 each)
The latest iteration is electronic rad valves with 6 adjustable timezones, "window open detection" - meaning they will turn off instead of trying to heat the planet and a "boost" (full heat regardless) mode which has a non-disablable countdown timer (5 mins default, up to 15 max) (£16-20 each, or £75 if you buy from a UK retailer)
The latest ones are zigbee, so I can even track temperature profiles if I want to
The counter-argument to the loss of jobs supporting city centre working is that workers are still being paid the same amount.
Money that they save from not having to commute, not having to buy lunch, not going to the pub after work etc will be spent on other things. For example, going out for dinner in the evenings with the family. Going to see a show or a game now that they have time in the evenings. Buying tools and equipment for DIY or hobbies.
Jobs and industries will move with the change in lifestyle.
Sure there is!
However, it involves taxing the money from the people who saved it - well-paid workers, upper management, and companies themselves - and giving it to the people who lost out.
Now, go check out the results of the last several elections and consider the likelihood of this actually happening.
>However, it involves taxing the money from the people who saved it - well-paid workers, upper management, and companies themselves - and giving it to the people who lost out.
Now, go check out the results of the last several elections and consider the likelihood of this actually happening.
Given what Rishi Sunak is rumoured to be considering, we might be in for a surprise!
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@juice: re: Public transport and secondary industries - no one gave any thought to this when the exodus was towards cities from outlying areas. Towns and villages have died because of the economic pull of big cities, especially those in the South East of England. Whole swathes of the country have become dormitories in which it is unusual to know one's neighbours. London in particular has benefitted hugely from the city-centric economic model, and the rentiers in particular have made hay from it. It can be very persuasively argued that Mr Johnson wants people to get back into their offices because he is under pressure from all those companies that got planning permission for new tower blocks as he was leaving his stint as Mayor of London.
The outsourcer-in-chief out sources its own workers to their own homes.
This really brings the IKEA-principle to the next level.
What's up next:
* negotiate your own salary?
* acquire customers on your own, work their projects, and earn a nice profit for the company that did basically nothing for you?
* hire your own replacement in case you fire yourself from the company?
> Er, you'd best check with your company's legal/HR departments and possibly your own lawyer before attempting this. The accounting and tax consequences are significant and not simple.
This is the same line my company gave me when I asked if I could work remotely from another country, as permanent WFH is becoming more and more common, why would it matter where the "home" is? As long as there is internet and a desk, I can work.
So I actually went and had a look.
From what I can see, it is simple as long as you stay resident in the UK. If you stay resident, you get paid and taxed via PAYE as normal, regardless of where in the world you physically are at that point.
I found out a lot more, and by and large it seems pretty straightforward to work from another country. In my case I could do it indefinitely while staying a UK resident just paying UK tax via PAYE.
As everyone's situation (and target country) is different, rather than explaining my situation, I can provide these links, which were very helpful to me, and hopefully to others who want to do some initial research without having to engage a lawyer/account:
Tax guidance/Information for "International Executives" (while new for us, the "work from another country" is not a new concept for senior management):
All I can say is I provided a detailed report on why there are no legal/tax barriers I could see to HR, and even offered to pay for a lawyer/accountant to verify as such if they would consent to me working from abroad if everything is confirmed as being OK by the professionals (and if the lawyer/accountant said it was not OK, then I would drop the request amicably).
Since then they have not come back to me, nor answered my requests for an update, whether I missed something or got something wrong. Just point blank silence.
As such, I suspect that the "Tax/Legal implications" are just an excuse, and the fact is they don't want to let you work abroad but can't say so directly.
Especially as I later found out that:
(a) I wasn't the only one with the idea. 3/4 of my teammates had also requested to work permanently from abroad, or from far flung parts of the UK, so I guess they are worried of a mass exodus out of the UK, and
(b) more annoyingly, a few "key" people were actually granted such privileges on a "case by case" basis (working permanently from southern Spain/Portugal mostly), which throws bunkum on the "legal/tax issues". Either the company has tax/legal issues with employees working abroad, or not.
However I am happy to be corrected if someone can give me a link to what legal/tax issues a company has if its employees decide to work from another country.
>From what I can see, it is simple as long as you stay resident in the UK. If you stay resident, you get paid and taxed via PAYE as normal, regardless of where in the world you physically are at that point.
Just need to watch out for double taxation, I seem to remember places like Ireland will tax you if you are there for more than 9 months continuously.
>However I am happy to be corrected if someone can give me a link to what legal/tax issues a company has if its employees decide to work from another country.
Well the issues I encountered were down to more practical matters:
- Forget about working (at home) on any project requiring security clearance.
- Expect to have to pay out of your own pocket travel expenses to a designated base office in the UK.
- Expect not to be offered on-site work where it is cheaper and quicker to get someone more locally based.
- Expect to have to work the UK 'office' hours normal for the company you are employed by.
I'm not a lawyer or an accountant, but:
1. This is an international site. Not everyone reading here is in the UK. I'm in Canada, for instance. There are lots of Americans here too, and the IRS is notoriously...grabby.
2. It's not just about you paying your income tax. Various taxes your employer pays or credits they claim might depend on your physical location or tax residence (which, as you note, aren't the same thing).
3. Your employer might have rules and policies that, while they aren't laws, you're still going to have to consider. Mine, for instance, only allows you to work from another country while getting paid at the scale for your "home" country for two years. After that your pay gets changed to scale for whatever the new country is, which if you're in the Caribbean is going to be "lots lower", most likely. And if you don't tell them you moved, you're in trouble.
I'm not saying anyone shouldn't do it, I'm just saying it's not as simple as "get visa then bog off to beachside paradise". You're at least going to want to tell your employer about it first, and yes, they *can* raise hell if you do it without agreeing it with them, unless it's somehow written into your contract that you can do it.
a few "key" people were actually granted such privileges on a "case by case" basis (working permanently from southern Spain/Portugal mostly)
Well, privileges are for the select few on the top.
Prior to lock-down, WFH was only granted to middle and top management. Then Corona came, and everybody worked from home - no complaints, business carried on.
Lock-down was lifted, and WFH was immediately banned, except for middle management and above; and if can present comprehensive and essential reasons to the supreme bosses and sway them to grant you the WFH privilege.
Corporate culture reminds me more and more of feudalism,
We go round and round because we've "always" gone round and round. The built and economic environment we've let evolve isn't really sustainable, and it seems we're just finding this out courtesy of COVID. But the powers that be don't want to hear the news, so we're exhorted to start the wheel spinning again.
The argument that certain kinds of business will suffer if we don't is no more relevant than the fact that that the once numerous jobs of farriers and street lamp lighters largely disappeared when motor vehicles and electricity became commonplaces. The process they're trying to ignore is called evolution, and its inexorable and ultimately inescapable. The "rush hour" has existed for around 140 years, but given the recently proven means of remote working its time is probably over. Unless of course we force it to continue because some business sector doesn't want to accept change.
Almost finished turning the loft into an office for the two of us ( dining room is a mess of monitors, docking stations etc and haven't sat at the table to eat since this all started) I just need a sparky to sign off the wiring and connect it to the board.
Now both of our employers want us back in the office 2 to 3 days a week. Better than the hour each way commute every day I suppose. My boss is one of those talker types / talks for hours about crap, all the important work is via email and service system, absolutely no reason for me to be there other than someone for him to talk at :/
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Large commercial landlords staring into the abyss if large companies reduce the size of there offices, knock on effect with pret and other large businesses is a secondary concern. Look at where the money is that props up the tory party....
"Large commercial landlords staring into the abyss if large companies reduce the size of there offices, knock on effect with pret and other large businesses is a secondary concern. "
Correct - we have seen "major industrial change" in places like Sheffield or mining towns. We have a fairly good idea of how long it takes those areas to recover. A generation... And COVID-19 has the potential to affect local workers in these areas, followed by landlords (defaulting on loans) followed by banks (repossessing overvalued assets). Western society has improved living standards via cities and urbanisation, bringing people closer to services. If we start going the other way, it's not just jobs, businesses and banks that will struggle. Common sense would be to ignore those working from home and prospering and instead focus on delivering the greater good because once the dominoes start to fall it will be hard to stop them.
"Look at where the money is that props up the tory party...."
I'm not so sure that this is the issue - the Unions are pushing a similar line to support workers. The majority of ElReg readers can work from home but that doesn't reflect the larger reality, particularly amongst support services or retail. But yeah, it's all the <insert political party that you hate here>'s fault
What about supporting the small business where we live ?
I have been shopping a lot more in local shops / butchers, CoOp, local independent restaurants and even found a hardware store that I didn't know was there. Tesco and ASDA are missing out as are all the large chains.
I do not see that as a problem and now that I have got to meet some of the locals that work and maybe even own their business I will continue to use them. Good quality / the butchers is awesome ! And knowledge / hardware store repaired my petrol strimmer instead of selling me a new one. Garage supplied and installed a new car battery for the same price Halfords were selling it. The money stays more in the local economy. What's not to like ?
"What about supporting the small business where we live?"
I have no issue with this - it is a similar issue where I live.
My question is more about the domino effect in larger cities. And the larger cities have had significant infrastructure investment to become large cities - both public and private. If a (say) Birmingham starts to die, it would be a major issue. Add that effect across all UK regions and you have 10-20 of slow regeneration and the economic impacts of that.
The reality is that most of the advances in healthcare/living conditions post-war have come from the scale afforded by cities. Losing that would be a revolution...
>My question is more about the domino effect in larger cities.
Well the fundamental issue is the extent to which that city relied on a daily influx of people.
As we are seeing in London and other major cities, much of the infrastructure and retail business has grown up to service the daily influx and not the local (resident) population.
A significant drop in the daily influx will expose the true position of cities, namely, they are dependent upon their hinterland. So with more people staying in the dormitory towns means there will be more opportunity for businesses there eg. use a hairdresser near to my home and not the one round the corner from work in another town/city.
Fundamentally, what we are seeing is the type of 'progress' being referred to in the saying "You can't stand in the way of progress", so the best approach is to adapt and change; but don't expect the change to be without casualties or pain.
"Well the fundamental issue is the extent to which that city relied on a daily influx of people"
We are still mid-game - what happens as subsidised furlough ends and companies need to decide how much of the ~27% of the workforce not currently working is required. Or those that weren't lucky enough to fit into the furlough scheme.
If this is the new normal, temporary transition schemes will need to bridge a large gap.
And if dominoes start tumbling, who will be able to afford to fill in the gaps?
>I'm not so sure that this is the issue - the Unions are pushing a similar line to support workers.
I suspect the unions see home working as a threat to their traditional power-base. Strikes become something quite different when you don't have large offices where a supervisor can exert influence and control and get everyone to adopt group think and down tools etc.
> The majority of ElReg readers can work from home but that doesn't reflect the larger reality, particularly amongst support services or retail.
Having teenagers I've been looking at this slightly differently. Given what we now know about CoViD-19, I suggest the best candidates for roles that require interaction with large numbers of the general public are young people.
>Large commercial landlords staring into the abyss if large companies reduce the size of there offices
I wonder how segmented the commercial sector is, ie. are those who own lots of office space the same ones as those who have been building warehousing.
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