The Covid-19 pandemic upended office life around the world, dramatically shifting the nature of where we work. And Centre for Cities has kept a keen eye on how the experiment with remote working has unfolded since. Our latest report looks at what has happened to working patterns in central London – the UK city most impacted by the large–scale shift to remote working – and what this may mean for future economic performance.
Current working patterns in central London are quite different from pre-pandemic, but far from the height of remote work during the pandemic
A survey commissioned for this research shows that working patterns in central London have shifted towards hybrid working since the pandemic. In April 2023 central London workers reported coming into the office on average 2.3 days per week – 59 per cent of January 2020 levels. The most common working pattern among respondents was two days in the office.
These patterns are far from the norm of working 4 to 5 days a week in the office pre-pandemic. But what will these changes mean for the forces of agglomeration in London and the future of London’s economy?
Face-to-face interaction and agglomeration have been important for London’s growth for a long time
London has grown as a result of the forces of agglomeration – the geographic concentration of economic activity – for at least the last century. And, in the twenty years before the pandemic, despite the invention of ever more sophisticated video conferencing activities, London’s knowledge economy became ever more concentrated in its core (see Figure 1 and 2).
Figure 1: Before the pandemic, economic activity in London was highly concentrated towards the centre of the city
Source: ONS
Figure 2: In the 20 years to 2018, output in London was increasingly generated in the centre, producing more than 50 per cent of the city’s output since 2016
Source: ONS;
Note: Centre of London defined as the boroughs of City of London, Westminster, Camden, Islington, Hackney, Lambeth, and Southwark.
This occurred because of the benefits that face-to-face interaction brings, namely to create and share new ideas and learn from one another by being in close proximity. While communications technologies make this more feasible, the increasing concentration of jobs most dependent on face-to-face interaction in London and many other big cities in the UK suggests that they aren’t perfect substitutes.
This occurred despite large improvements in communications technologies, which have made it easier to communicate without being face-to-face. The persistent and long-term nature of these trends suggest that we should expect the forces of agglomeration to continue to shape London – especially its knowledge economy.
Central London is alive with office workers once more, but the majority work a hybrid pattern
It is for this reason that predictions of the death of the office were misguided. Data from Transport for London on exits from Tube stations into office districts (think Moorgate and Liverpool Street) show a strong recovery in ridership through 2022, reaching around 70 per cent of pre–pandemic levels. People have come back to the office. The current trends of hybrid work and a return to office suggest the forces of agglomeration are still at work – if not, we’d still be having conversations about fully remote working.
This return seems to have levelled out since the turn of the year, with TfL data showing little further increase in exits out of ‘office’ stations. While this suggests that hybrid working is now widespread, there is very little information on the nature of it. To get an understanding of this, we commissioned a survey as part of the work to get a handle on what hybrid looks like in central London. The answer was an average of 2.3 days per week, with workers spending around half of their working hours in the office (up, presumably, from next to zero during lockdowns).
The million–dollar question is what impact this reduction in face-to-face interactions has on productivity. There is as yet a lack of evidence as we are still very much in the early stages of this experiment. Working from home offers clear benefits to employees, allowing flexibility in time management and limiting commuting costs. But these benefits must be balanced with potential long-term costs of less face-to-face interaction. If hybrid working reduces creativity, on-the-job learning, or innovation, the immediate benefits of remote working to employees might not outweigh the potential larger economic costs of productivity loss. There is plenty of evidence that at the very least raises this as a legitimate concern.
Policymakers should be proactive in measuring the impact of hybrid working and mitigate risks from long-term hybrid working patterns in London
Given this, policymakers should be alive to not inadvertently undermining the benefits of office working by listening to only one side of the argument. While it is right to consider the views of the employee in the debate, this must be considered alongside the view of the employer and what is best for long–term prosperity.
There are two things for local (while the report looks at London, the arguments play out across all cities) and national politicians to consider how they facilitate the benefits of face-to-face working while also mitigating the costs workers face from making those interactions happen.
On the benefits side, local and national leaders should work alongside businesses groups to create a positive message about returning to the office. It is understandable – given how tight the jobs market is – why most individual businesses have not pushed for a greater return to the office (a subject we’ll look at in more detail in a subsequent blog). This means that a coordinated approach is instead required akin to the Mayor of London’s ‘Let’s Do London’ campaign to get people spending their leisure time in the Capital once more.
On the costs side, the most immediate lever policymakers have is around transport. They should guard against cutting the frequency of public transport at peak times as this would increase the time cost of commuting. They should be cautious about delaying or scrapping further investment in transport infrastructure too. And, where possible, they should reduce the monetary cost. The extension of the £2 cap on bus fares does this. In London, TfL could offer to scrap peak fares on a Friday (the least popular day to come into the office) for those commuters who have travelled in on a set number of days already in a given week.
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