Which Is Cheaper: Working From Home Or Working In The Office?

Being a homebody probably isn't going to be great for your bank balance.
Is it cheaper to work from home or go into the office?
Morsa Images via Getty Images
Is it cheaper to work from home or go into the office?

The pandemic left most office workers weighing up two options on an almost daily basis: to office, or not to office?

And the cost of living crisis means many of us are watching our bank balances more than ever before. Inflation is now at a 40-year high of 10.1% (and set to get higher), and childcare costs are through the roof.

Then there’s the upcoming hike in the energy price cap, as the annual average for energy bills is set to climb to £3,549 come October 1 – sparking significant concern for people who work from home.

So, if you’re lucky enough to have a choice, what’s the most economical option for you? Here’s what you need to consider.

What was cheaper before the cost of living crisis?

On average, it was cheaper for people to work from home before bills went up.

The price of commuting along with the tendency to buy lunch outweighed the energy bills associated with working from home.

Confused.com claimed in 2021 that the average commute by car for five days a week cost £128 per month, by train £328 per month, and £76 per month if travelling by bus.

The website’s research also found the average worker spent an additional £46 on other items while working, such as food or socialising, which they then didn’t spend when at home.

Confused.com concluded that many office workers saved potentially more than £2,500 in the first nine months of the pandemic, when the UK was in lockdown.

So, what’s changed?

The cost of living crisis has altered the weighing scales substantially, meaning it now looks like working from the office will actually be better for your wallet.

Inflation is far outstripping pay growth, and may even exceed 18% come January, according to forecasts from Citi investment bank.

This means the cost of regular items – from food to petrol – are going to be rising, taking a much larger portion of your pay checks each time, while your salary stays the same.

It’s also worth noting that the energy price cap may be about to climb to £3,549, but you could be charged more than that.

As regulator Ofgem explained, this is “not a cap on the maximum bill a household can be charged, which is based on their usage”. So anyone will poorly insulated homes, for instance, could be charged a lot more than the cap.

Pay growth v inflation
PA Graphics via PA Graphics/Press Association Images
Pay growth v inflation

How will that impact your work day?

Here are the factors you need to consider when weighing up the costs of working from home or working from the office.

Energy bills

The most worrying expense for many people looking to work from home now is energy bills. Using computers, the heating, kitchen appliances and other electrical devices all adds up.

Annual energy bills are set to soar so high many people may be pushed into fuel poverty in the UK – so unsurprisingly, workers might be looking to go into the office for warmth instead this winter.

After all, from October 1, a small 23kW combi boiler found in a flat is estimated to cost £3.60 an hour to run, according to analysis from New Statesman’s business editor Will Dunn. A larger, 32kW boiler will cost £4.80 an hour.

Boiling a kettle will also cost more than 10p, and a desktop PC and monitor (running at 300 watts for eight hours) will add up to £1.25 a day at the new rate of 52p per kilowatt hour.

Dunn calculated that all in all, a poorly insulated UK home could cost more than £30 a day.

Commuting by car

Prior to October’s energy hike, transportation and the cost of a commute were often cited as one of the main reasons people should be able to work from home if possible.

Fuel costs were the largest expense for most people travelling into the office before the pandemic, too – but now, energy costs have overtaken petrol prices by some margin.

As Ofgem boss Jonathan Brearley explained last week, if natural gas prices were rising at the same rate as petrol prices, then filling the average car would cost £400 to £500, rather than just under £100 as it does right now.

Startups.co.uk found that outside of London, driving to the office instead of working from home saves an average of £21.16 per month. This will go up to £35.76 per month in January.

Commuting by public transport

Although energy bills are climbing, public transport has also increased in price.

The typical rail season ticket now costs £3,263 per year, and bus fares and the London Underground tickets were increased by the largest amount in a decade (nearly 5%) in a bid to recover from the pandemic.

However, Startups.co.uk also found that for people living outside of London, getting the bus to work is cheaper than working from home.

And, come January, this will apply to people who live in London too.

While cycling is a free option for some – if you already have a bike – not everyone is able to do so due to the distance they may have to travel, or various health conditions.

Meals

Food is getting more expensive, so buying any meals out will still be pricier than rustling something up at home.

The hospitality industry has had to trickle extra expenses from the cost of living crisis down to the consumer, meaning your usual Tesco meal deal has increased from £3 to £3.50 (without a clubcard).

One worker told the BBC that they spent “more than a quarter of what I make per day just to be able to go into the office” due to buying breakfast and lunch.

But, you can still prepare your own food at home and then transport it into the office to cut down on costs.

Company stipends

Some companies previously offered workers a stipend to encourage commuters into the office. Consultancy PwC is offering an additional £1,000, while bank Goldman Sachs is offering free breakfast and lunch to some.

This obviously could have a huge effect on how much you spend of your own personal money day-to-day when travelling to the office – but this is not exactly an option available to all workers.

Firms were keen to get workers back into the office because just one day of UK commuting is worth £82 million to the economy, according to the BBC back in April.

However, there is no energy price cap for businesses, which means some may consider closing their offices or reducing their opening hours this year to save on their own costs – another factor needed to be considered when weighing up returning to the office.

Childcare

Some people have attempted to both look after their children and work at the same time when operating from home, but this isn’t really an option when you head into the office.

The Centre for Policy Studies think tank revealed earlier this year that the UK pays the highest childcare costs in the developed world.

It found it cost around £138.40 per week for 25 hours of childcare for an infant under two, while part-time care costs an average of of £7,212 per year per child.

Although the government is considering reducing how many members of staff are needed per child in cost-cutting measures, two-thirds of families are also paying more or the same for childcare as they do for rent or mortgage, according to a survey of 27,000 parents.

However, some nurseries are also closing part-time to cut back on their own energy bills – again, limiting some parents’ options about where they can work.

Childcare costs have risen to astounding levels
FatCamera via Getty Images
Childcare costs have risen to astounding levels

So... should we work from home?

The best thing to do is to calculate the costs of your average working day in the office, and compare it to the energy bill during your working day at home to figure out which is cheapest.

While everyone is tightening their purse strings, it’s also important to think about what matters to you (and probably what your boss says, too).

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