Should we be forced back to the office to save the economy?

The government wants us to return to our places of work because it will help the broader economy recover – but is that correct? In the first of a new series on the future of the workplace, Ben Chu investigates

Many business services firms seem relaxed about whether their workers return to the office (AFP/Getty)

The nudge is morphing into a shove.

What began as a prime ministerial exhortation for British workers to return to their offices if it was safe for them to do so is now, we are told, to become a full-blown government campaign to encourage people to get back to their old desks in town and city centres across the UK.

There’s talk of newspaper adverts and posters. Apparently, we can expect an emphasis on the social and health benefits for workers of returning to pre-lockdown office life.

Yet the government briefing to some outlets also suggests that the carrot will be coupled with stick, or at least the fear of it.

It’s been rather darkly suggested that those who do not go back to their old desks are more likely to find themselves made redundant if companies decide to restructure.

Some people at the heart of government are clearly worried about the economic impact of the fact that millions of workers are continuing to work from home even though the official requirement for them to do so has gone.

There are reports that ministers have been alarmed, as they are chauffeured through empty city centres, at the sheer lack of people on the streets and the knock-on impact of that absence on those businesses that support office workers.

Some business lobby groups are also concerned. Carolyn Fairbairn, the boss of the CBI, this week urged ministers to encourage people back to their former workplaces, describing offices as “vital drivers of our economy”.

One can imagine the slogan “return to the office, save the economy” replacing the “stay at home, save lives” injunction that accompanied the lockdown in March.

Yet it’s worth considering whether or not this is actually true. Just how important is what we might call the UK’s “office economy” in the broader scheme of things?

It’s pretty obvious why, in the short term, an absence of office workers is economically damaging.

One need only think of all those sandwich shops, cafes, pubs, bars, restaurants, news agents, gyms and dry cleaners in city or town centre locations that have seen their custom fall off a cliff since March.

The fact that Pret a Manger, the ubiquitous chain that’s become almost synonymous with the office take-out lunch, has seen a 60 per cent decline in business in the past six months is emblematic of what’s been happening to all those other businesses.

Then there’s the transport businesses that get people from their homes in the suburbs to the city centres to consider. Train, bus and underground passenger numbers have collapsed, ruining the finances of the organisations that run them.

Transport for London, which runs the London Underground, seems to be facing a £5bn hole in its finances.

Ministers cannot afford to allow these organisations to fail since that would deprive hospital staff and other key workers of their means to travel to work so they have had not choice but to bail them out with billions of pounds of public money.

At that moment that’s effectively an open-ended financial commitment, which no doubt partly explains why ministers are keen for the commuters to return.

But how much does the office matter for the overall economy?

Around half of all trips by surface rail are either for commuting or business purposes. And a reasonable share of our sizeable hospitality and retail trade is based in city centres, although it’s hard to estimate how much they rely on office workers relative to tourists and normal visitors.

To give a rough idea of the importance of these sectors, retail accounts for around 5 per cent of UK GDP and hospitality 2 per cent.

They unquestionably matter for the wider economy.

Yet it’s worth comparing their size to other sectors of the traditional office economy. Banks and insurers account for around 7 per cent of the economy. Law firms, accountants and management consultancies are another 7 per cent. Another 7 per cent is information technology firms. And what’s notable about these types of business services firms is how relaxed they are about any return to the office.

A BBC survey this week found that fifty of the biggest UK employers have no plans to return all staff to the office full-time in the near future.

To some extent this is because of the concerns of workers about the possibility of coronavirus infection, but it also implies – and this is backed up by surveys – that the managements of these firms have found that having a large proportion of their staff working from home has been satisfactory for them.

A far larger proportion of the employees of these type of professional services firms tend to have been working from home too.

To this extent the idea that the overall British economy cannot recover until offices are full again looks like an exaggeration.

It’s perfectly plausible to argue, as some do, that the future will involve considerably more home working on a permanent basis and that this will result in a restructuring of the economy – with fewer shops, bars and gyms etc in city centres and more opening up closer to the places where people now live and work.

Office workers might even have more disposable income to spend in those new local businesses because they won’t have to spend so much commuting.

No one, of course, knows for sure how this will pan out, but it’s clear the Covid crisis has opened up a range of possibilities along these lines.

It’s understandable that ministers are trying to encourage people back to the office. And there probably will indeed be high-profile economic costs and casualties if the commuters and office workers don’t flood back in the coming months. But the danger is that the government is shoving against the tide of a major structural economic change (the ramifications of which The Independent will explore in future articles).

Such exercises historically tend to end in disappointment.