Alexander Jan: London needs the government to encourage a return to the office

Last year, many countries, including Britain, began a huge experiment involving millions of people. Not mask-wearing or social distancing, not rolling out new vaccines in record time, but instructing large parts of their working populations not to travel into city centres but to work from home instead.

The effect was dramatic. In the space of days there was wholesale abandonment of offices and, of course, public transport. In the UK capital, passenger volumes of Transport for London services fell by more than 90 percent. “Work from home” was probably the most successful public information message in eight decades. Not surprisingly, economic growth tanked. At one point, England’s output fell by more than a fifth. London’s decrease was not far behind it.

Fast-forward from those dark days, and government restrictions on nearly all activities have been eased. A national rail “let’s get back on track” campaign has been launched, and TfL is running its own “welcome back London” promotion, which sits alongside the Mayor’s and London & Partners’ “Let’s do London” campaign. The TfL marketing cleverly shows Tube trains and buses linked to activities such as playing five-a-side, swimming and shopping, accompanied by cheery music.

Work, however, doesn’t get a mention except sandwiched into “after work drinking”. Despite its enthusiasm for getting people back into doing fun things, the government remains reluctant to encourage a concerted return to work for office-based staff, not least its own civil servants. Instead, the advice – to the extent that it exists – has basically been to allow everyone to work out for themselves what they want to do and see what happens. There is a sort of logic to this: the argument goes that only a nanny state would tell companies to how to organise their affairs, even though the state has been a nanny on steroids for 18 months. But is it really the right approach?

Home working was a response to a health emergency, not to subtle changes in labour market preferences. For decades, academic research and large chunks of government policy encouraged city-based working and growing cities with, ideally, high levels of density underpinned by sustainable public transport. The economic case for doing so was pretty compelling: productivity gains of up to 20 per cent compared to more dispersed models of growth have been found to exist.

The denser city centre model also helps with social inclusion, as it provides individuals from less prosperous neighbourhoods with access to higher paid jobs and opportunities for greater social mobility. For many, the 45 or 60-minute city has lots more to offer than the 15-minute version. An array of educational, cultural and entertainment activities can be sustained. Universities, theatres and museums, as well as their often complex supply chains, do much better when within easy reach of each other.

At the moment, the UK is engaging in a de facto unplanned and under-researched experiment about how its labour force is organised. There has been much anecdotal evidence about home working improving productivity, but harder evidence is sketchy at best. There is a risk of conflating the productivity of individuals who can now do more of their domestic chores and hobbies with increasing wealth creation and public service provision. In the private sector, at least part of the profitability levels recorded in 2020 might have had more to do with the very large fiscal and monetary packages that have been pumped into the economy, than with people working from their living rooms or bedrooms.

And the risks of this experiment apply far beyond the boardroom. Firstly, over the longer term, there is a danger that London’s carbon footprint will be made heavier. In a world in which commuters choose to work in the centre for, say, two or so days a week (some are advocating zero), workers may well choose to live even further away from it. In doing so, it is almost inevitable that they will become more car-dependent than before, because their more dispersed local neighbourhoods are unable to sustain good public transport services. The whole of London’s Central Activities Zone could be weakened by reduced footfall and spending. As Professor Tony Travers puts it, there could be a “Los Angelesification” of a capital that is more road-based, more spread out and less sustainable.

Then there is a social and intergenerational challenge. Some of the proper research done to date, such as that by the University of Chicago, has picked up that younger people are less able to cope with home working. This could be because people with more work experience have the major advantage of social and business networks formed in the pre-Covid world. There is also evidence that home working is the purview of the white collar and the better paid. Jobs that simply have to be done at a place of work are often lower paid and, in a traditional sense, less skilled. This risks opening up yet another “culture war” front, in this case between those who can and those who can’t choose where to earn a living.

In transport, the prospect of Whitehall-imposed cuts to TfL services threatens what commissioner Andy Byford has called a “death spiral” hit to a system made vulnerable by decades of British governments deliberately heaping the increasing cost of public transport onto passengers. Pre-pandemic, as think tank Centre for London has highlighted, TfL was more dependent on farebox income than any other world city transport operator.

In service level terms, this has been mainly a phoney war so far: short-term financial settlements have spared returning commuters and others the painful reductions the Treasury has in its sights as it looks to strip out costs from running half-full trains. But if such cuts further discourage public transport use, it will make life even harder for system operators. Fixed costs will remain high as revenue falls. And the unwinding of season tickets which have enabled commuters to make extra trips at zero additional cost would mean they will think twice before coming into town to see a film or go to a restaurant. They might jump in their car and go round the M25 in search of such pleasures instead.

Of course, central London might learn to survive and thrive in such a world. It has historically been a highly desirable location. Property agents report buoyant demand for top grade office space, and less posh office space – freed up as employers sub-let into the market and prices adjust – may in the longer term fill up again. But none of this is certain. And how secondary towns and cities will cope is less clear. These changes could paradoxically do sustained damage to the levelling up agenda.

Instead of leaving it all to the market, the government should send very clear signals that a return to work proper is a desirable and economically important objective. It could help this by reducing public transport fares or at least holding off further increases while maintaining services. Business rates could be intelligently reformed to ease the burden for our city centres. And, as with House of Commons staff, it should get the civil service back into Whitehall on a routine basis.

The government intervenes constantly in other aspects of our lives, around climate change, the food we eat and what we drink. So why not the future health of our urban economies, especially London’s, which is so important to the whole country? Not to do so risks unravelling years of progress in making UK cities the powerhouses of our economies, as well as culturally rich, creative places offering opportunity to all. Just as Crossrail is about to finally open, and at a time when Britain faces so many headwinds in the aftermath of Covid and Brexit, a bit more state intervention might for once, be just what matron ordered.

Alexander Jan is chair of Central District Alliance and Hatton Garden BIDs and chief economic advisor to the London Property Alliance.

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