Will WFH be good news for the poorer UK economic regions?

London has always dominated the British economy. Our national wealth was more evenly distributed when there were still shipyards in Belfast, productive mines in Wales, and vibrant ports, such as Liverpool and Hull. However, as all this heavy industry has declined more and more service sector jobs – such as banking and insurance – have gravitated to London and the South East.

There is even a government department for ‘levelling up, housing, and communities’ which is focused on creating opportunities for business and employment all around the country.

But is there an opportunity to more strategically use working from home (WFH) as a way to create opportunities outside of the South East?

It’s clear that WFH has quickly become an expectation of employees. Bloomberg recently reported that three-quarters of workers in London would quit if their company demanded that they return to work in the office. But this also means that those workers don’t really need to be in, or near to, London at all.

If employees are WFH then they could be in a remote village in Scotland, Wales, or a small town in Yorkshire – they just need broadband. There is an obvious opportunity for regions of the country that desire more residents paying local taxes to create greater pull factors for these professionals.

Some civic executives have encouraged an end to WFH because of the effect on cities when people start working remotely more often. These effects include fewer people enjoying the city, fewer people visiting shops and business – especially hospitality, and a general change in how people use the city centre.

Dr Jesse Matheson of Sheffield University published research exploring the regional effects of WFH and found that there is a significant increase in economic activity in suburban areas – many of those coffees are still being purchased, just closer to home. Dr Matheson estimates that over £3 billion in retail and hospitality spending will permanently leave city centres in the UK. This is also depressing property values in London, but is increasing housing prices in traditionally less expensive places to live – such as Sheffield.

The Office for National Statistics has managed to capture an interesting picture of regional changes and how WFH has become more popular. ONS data shows that between October to December 2019 and January to March 2022, homeworking in the UK more than doubled, increasing by 108.8% (up 5.2 million), from 14.5% (4.7 million) to 30.6% (9.9 million). The number of homeworkers increased by more than 50% in all UK regions and Scotland saw the largest percentage increase in homeworking (203.5%, up 544,000 people). 

Regional patterns captured by the ONS are also interesting because it is clear that the number of workers living in or commuting to London has dropped by 4.8% at the same time as a 3.1% increase in the East of England. The UK WFH population is now roughly the same as the entire working population of Austria. 

A large number of countries have enacted policies to specifically attract remote workers – often called digital nomads. Argentina, India, Spain, Croatia, Estonia, are all examples of countries that make it very simple for skilled workers with remote online jobs to move to their region. These countries want smart, generally well-paid, people who will come and pay taxes.

But isn’t there a similar opportunity inside the UK? Surely Manchester, Liverpool, or Hull could create pull factors that would draw remote workers to their regions? If you look at the government agenda it is aspirational and worthy, but it doesn’t feel like there is anything to make a professional want to leave London and move to Liverpool.

Property prices, rent, and council tax are all lower outside of London. Could regional mayors offer extra tax discounts or subsidised rail travel or other financial incentives that might attract professionals? Many nations have seen the opportunity and are actively promoting their region to digital professionals. If we saw this happening inside the UK then it would be a huge shot in the arm for levelling up plans because once people are focused on WFH, they don’t need to be in any specific region of the UK.

The regional possibilities are clear, but will mayors have the vision and ability to design attractive pull factors?

Leave a Reply

Your e-mail address will not be published. Required fields are marked *