Rising energy bills will make it CHEAPER TO COMMUTE than to work from home this winter

With the cost-of-living crisis attacking the UK workforce from all angles, Startups research finds that going into the office this winter will be the most cost-effective decision that employees can make.

Office workers everywhere outside of London will find that due to rising energy bills, working from home will be costlier than commuting in.

With a bruising energy price cap rise coming in October, and a further one due in January, household budgets have rarely been tighter. Employers will increasingly find their staff questioning whether they can afford to commute into work at all – but it might prove to be the smartest move possible.

Should you stay or should you go? We’ve found:

🚗 Outside of London, driving to the office (instead of working from home) will save an average of £21.16 a month. This increases to £35.76 per month in January.

🏠 London office workers are better off staying home than using the tube. They can make a saving of £85.60 per month across all six travel zones.

🚌 Don’t get the bus to work in Nottingham, Glasgow, Leeds, Liverpool, and Sheffield. High fares make working from home cheaper than commuting.

🚌 However, come January, don’t miss the bus! Those who commute by bus in every city including London, will save money, versus working from home.

Where we can, we’ve drawn up indicative/illustrative data to examine the cost of fueling a commute versus fueling your home. For the purpose of this investigation travel by train has not been included into our estimates.

We’ve pulled out the key information from our data to help paint a picture of the home budget calculations going on up and down the country, as we explore the ways that today’s small business owners can support their staff through the cost of living crisis.

How much does it cost to work from home?

In these times of rising energy bills, home offices can be painfully expensive to run. This is particularly true in winter, when energy consumption rises as people use more gas and electricity to heat their homes and keep lights on for longer.

However, based on the new energy price cap estimate of £3,582 a year, Startups has calculated that the average UK worker will spend an estimated £77 per month on energy bills to work from home five days a week. That equates to £3.85 per working day.

In January, when the cap is expected to rise, this number is calculated to jump as high as £91.60 per month, or £4.58 per working day.

These figures take into account the government’s support package for households – a £400 discount on energy bills for over 29 million households. This will be automatically distributed over six instalments, starting from October.

However, with inflation now at 10.1%, there will be other factors influencing the cost of working for employees such as childcare fees, broadband costs, and lunch food costs going up.

Driving remains cheaper even with fuel costs

Based on extensive research conducted using data from the Office of National Statistics, we have worked out that,in every major UK city outside of London, it will be cheaper to drive to work than to stay at home from October as a result of the energy crisis.

Despite petrol prices hitting record-high rates this year, travelling by car will still save UK commuters an average of £21.16 per month.

Office workers in Plymouth will save the most by driving in, rather than staying home, with an approximate monthly saving of just over £30 a month – enough for ten Tesco meal deals.

Meanwhile, drivers in smaller cities will save the least, with Cambridge travellers saving just an extra £16.18 per month.

In January, the cost of energy bills is forecast to increase by 19%. This will generate even bigger savings for those that choose to commute – even if the cost of fuel increases alongside inflation.

As such, we estimate that drivers in January will save £35.76 per month, on average, over those working from home full-time.

As a result, employees in seven cities (Hull, Brighton, Portsmouth, Plymouth, Southampton, and Swansea) will be able to save an average of more than £10 per week by driving into work from January onwards, rather than heating their homes and using extra electricity throughout a working day.

The above table illustrates the average amount that a person can save by commuting into work, rather than working from home.

We calculated these figures by working out fuel costs for commuting to and from work in 25 major UK cities. We then deducted these from the mean cost of working from home in October and January (based on the expected energy price cap increases).

One way to help staff reduce driving costs is to offer them mileage allowance. Find out more about tax on fuel claims in our guide to HMRC mileage rates.

London driving versus the rest of the UK

London is the only location in the UK where it is still cheaper to work from home than to drive into work. On average, those travelling into the city centre will lose out on £21.73 per month in October, compared to those that can work remotely from home.

Drivers commuting to the capital spend around £98 per month on petrol just for travelling into work. For a worker on the London living wage, that equates to 7% of a monthly salary.

This is probably due to the fact that more office workers live outside of the city than in other urban areas, and are therefore likely to travel further.

Indeed, government figures show that London commuters drive 36 miles to get to work, compared to an estimated 18.2 miles for all other UK city workers.

In January, however, Londoners who commute by car will make just £7.13 worth of savings if they stay home, as the cost of heating a home rises.

Another factor that drivers in London have to consider is carbon emissions. Cars in London need to meet minimum emissions standards when travelling within the Ultra Low Emission Zone (ULEZ) or pay a daily charge of £12.50.

To avoid these added vehicle charges, many London workers choose another route to work by hopping on a tube. But our research found that this could end up costing them more than even the upcoming rise in energy bills.

Is it cheaper to use the bus?

Government figures show that 70% of workers in the UK commute by car. However, 6% of employees travel into the office by bus.

Public transport is good for the environment. But is it also good for workers’ wallets this winter? The answer is almost overwhelmingly yes.

We calculated the cost of travelling to work via bus in 25 major UK cities. Our data shows that bus riders will save just under £15 per month by choosing to work in the office in October, as the majority of transport costs are outweighed by the daily cost of running a home.

There are some areas where it still pays to avoid the bus. Riders based in Nottingham, Glasgow, Leeds, Liverpool, and Sheffield will all benefit from working from home this winter as energy bills remain just below monthly bus fees.

On average, bus commuters in Nottingham spend £100 per month getting to and from work – meaning that by avoiding travel costs they could save £23 per month.

Come January, however, energy bills are projected to rise so much that only commuters from Nottingham will find it is cheaper to work remotely than in the office.

On average, the typical UK employee will save an estimated £29.56 a month to swap a lie-in for a bus seat in 2023.

Transit riders in Hull will see the biggest advantage of riding the bus next year, with a predicted monthly saving in January of around £57.60. That’s enough to purchase a six-month subscription to Amazon Prime and have money left over.

What about hybrid workers?

SMEs have struggled to get office numbers back to pre-COVID levels, with a recent study finding that typical attendance in June and July was less than 1.45 days per week. This year has seen a huge rise in the number of employers choosing to adopt a hybrid working policy where staff are allowed to work from home for a number of days per week.

We’ve worked out that commuting into the office five days a week is cheaper than working from home – but how do hybrid workers fare when compared to those going into the office full-time?

Those going into the office three days a week will still minimise their energy bills more than home-workers, making it a policy worth engaging with for employers.

We estimate that those commuting by car will reap the most financial benefit, saving £13.65 per month. That’s compared to bus users, who’ll save £7.66 per month – enough for a month’s subscription to NOW TV.

London Underground users will still lose out, although considerably less so than if they commuted in on all five days.

Tube travellers across all six zones and working three days in the office will sacrifice just £51.40 per month.

That’s compared to an average saving of £85.60 to work five days in the office – enough to cover a year-long Disney Plus subscription (£79.90).

How can small business owners support staff facing higher energy bills?

We’re not saying it costs nothing to heat an office. Business owners across the country have already been hit by large energy bills this summer, with some even announcing closure as a result.

However, ONS figures from August show that, while average wages rose 4.7% between April and June, the “real value” of pay has actually fallen by 3% across the UK as a result of inflation.

If you’re a business owner, it’s vital to be conscious of the household budget concerns of your workforce. This is particularly true in the current hiring crisis, when keeping staff satisfied is crucial if you are to retain valuable talent.

According to our results, it is cheaper for commuters in the biggest UK cities to go to work than to heat their homes this winter. We’ve used illustrative figures, and the real cost of working will differ depending on the individual needs of your workforce.

There are undoubtedly benefits to office working. However, as we’ve demonstrated above, hybrid working can still save money for the majority of commuters over working from home full-time.

Offering staff the flexibility to choose whether or not to work from home is the most sensitive solution to support your employees during a recession. If you haven’t already, we recommend that business owners rapidly consider putting a hybrid working policy in place.

Don’t underestimate the positives that hybrid working can bring to your business. It can empower your employees to make their own choices around budget and work-life balance, and give them more freedom to find the cheapest route through the next 12 months.

It will also demonstrate your keenness as an employer to help your staff through a recession at a time when many businesses simply can’t afford to raise salaries.

For more information about the research in this article, please contact hello@startups.co.uk for a full breakdown of our results.