Could rising energy bills spell the end of working from home?

Could soaring energy costs spell the end of WFH? How Britons face paying an extra £9.10 a DAY on their heating and electricity bills by working from home this winter… meaning millions could save cash by returning to office

  • Households are warned of an annual energy bill in excess of £3,600 this winter
  • Employees are considering whether to increase days in office, say HR experts
  • Leeds council director says staff ‘may actually decide it’s cheaper to come in’

How soaring energy bills could compare to the cost of commuting 

MONTHLY ENERGY BILL

  • £191 for gas and electricity if working from home in January

MONTHLY COMMUTING COSTS

LONDON BUS

  • Any journey: £69.30 (42 journeys at £1.65 each) – CHEAPER

LONDON UNDERGROUND

  • Zone 2 to Zone 1: £134.40 (42 journeys at £3.20 each) – CHEAPER
  • Zone 3 to Zone 1: £151.20 (42 journeys at £3.60 each) – CHEAPER
  • Zone 4 to Zone 1: £180.60 (42 journeys at £4.30 each) – CHEAPER
  • Zone 5 to Zone 1: £210.00 (42 journeys at £5 each) – MORE EXPENSIVE
  • Zone 6 to Zone 1: £231 (42 journeys at £5.50 each) – MORE EXPENSIVE

CAR

  • 20 miles: £137.76 (42 journeys at £3.28 each) – CHEAPER
  • 25 miles: £172.62 (42 journeys at £4.11 each) – CHEAPER
  • 30 miles: £204.96 (42 journeys at £4.88 each) – MORE EXPENSIVE
  • RAC mileage calculator used, based on 52.3mpg Ford Focus hatchback with petrol costing 191p a litre

Millions of Britons opting to continue working from home after the pandemic are facing a difficult decision this winter with the cost of energy bills meaning it could be cheaper to be in the office.

Households across the UK have been warned of an annual energy bill in excess of £3,600 this winter, making it extremely expensive to heat and power properties.

Now, HR experts and council bosses say staff will consider whether to spend more days in the office in the colder months after the next price cap rise in October.

And Uswitch estimates households where people work from home will use an extra 25 per cent more electricity and 75 per cent more gas per day in winter.

Based on price cap forecasts, this adds up to a potential yearly increase of £686 per household over the winter period, including £191 in January alone for those on standard variable tariffs. The experts added that the cost would be £139 for November and £143 for December.

MailOnline has calculated that it would therefore be cheaper to go into the office during January for Londoners who work in Zone 1 but live as far out as Zone 4.

Looking specifically at January, there will be 21 working days, which means the cost of powering and heating your home in this month would be £9.10 every day.

Those commuting to work by bus in London would pay £69.30 a month, based on 42 journeys at £1.65 each.

Those commuting on Underground from Zone 2 to Zone 1 would pay £134.40 a month, based on 42 journeys at £3.20 each. Those travelling from further out in Zone 4 to Zone 1 would pay £180.60, based on 42 journeys at £4.30 each.

It is only when you get to Zone 5 that journeys into Zone 1 will be pricier than working from home – equating to £210 for the month, made up of 42 journeys at £5 each. From Zone 6, it would be £231 a month, that being 42 trips at £5.50 each.

Those commuting into London from further outside the capital are also unlikely to see any benefit in cost savings – with a monthly season ticket pricier in almost all cases. Taking the example of some commuter towns, Woking to London is £351.80 a month, Luton to London is £452.80 and Reading to London is £484.30.

If driving, the example of a 52.3mpg Ford Focus hatchback was used with petrol at 191p a litre. It would cost £6.56 a day or £137.76 a month for a 20-mile journey each day; £8.22 a day or £172.62 a month for a 25 miles; or £9.76 or £204.96 for 30 miles.

This means that those driving to work would possibly save money on not having to heat or power their homes while in the office, if their commute is under 30 miles.

Leeds City Council’s director for resources Neil Evans said some of the authority’s staff ‘may actually decide it’s cheaper to come in rather than heat their homes’.

And HR expert Sam Alsop-Hall said his colleagues have been discussing what to do, with one predicting his energy bills will be nearly £500 a month – ‘more than my car’.

Others have suggested that community spaces could offer a warm base for those working remotely, which would be cheaper than heating lots of separate homes.

It comes as energy consultant Cornwall Insight said a regular gas and electricity bill in England, Wales and Scotland could reach £3,615 in the new year.

This is hundreds of pounds more than previous predictions, with Cornwall Insight predicting just last month that annual energy bills would typically rise to £3,244 from October and £3,363 from January.

Energy bills forecast to hit £3,615 as cost-of-living crisis worsens

Households across Britain have been warned they could face an annual energy bill in excess of £3,600 this winter.

Energy consultant Cornwall Insight said a regular gas and electricity bill in England, Wales and Scotland could reach £3,615 in the new year, which is hundreds of pounds more than previous predictions.

In May, the Government announced an energy costs support package – worth £400 per household – in response to predictions that bills would rise to £2,800 for the average household in October.

Last month, Cornwall Insight predicted that annual energy bills would typically rise to £3,244 from October and £3,363 from January, but circumstances have changed significantly since then.

The company told BBC Breakfast yesterday that such a bill is now likely to rise to £3,358 from October and £3,615 from January.

Cornwall Insight’s principal consultant, Craig Lowrey, said surging gas prices and concerns about Russian supply had prompted the increase.

The company estimated yesterday that such a bill is now likely to rise to £3,358 from October and £3,615 from January. 

In May, the Government announced an energy costs support package – worth £400 per household – in response to predictions that bills would rise to £2,800 for the average household in October. 

Mr Evans told a Leeds City Council scrutiny meeting last week that working from home in some form will probably stay permanently, reported the Yorkshire Evening Post.

But he added that while much of the workforce is still working remotely because of commuting costs, this could change from autumn when colder weather begins to take hold.

Mr Evans said: ‘I’ve got lots of staff saying, ‘Prove to me I need to come in’. I personally think there’s a need for regular contact because of the quality of relationships between people, development of new staff and good supervision.

‘We all need these things to be done in-person because it’s quite difficult to do them remotely.

‘But that challenge of showing those things are necessary is something staff are (asking for). People are now saying they’re struggling with finances and the cost of transport.

‘We may see more people come back in September and some people may actually decide it’s cheaper to come in rather than heat their homes.’

Sam Alsop-Hall, chief strategy officer at Birmingham-based healthcare recruitment company Woodrow Mercer Healthcare, said he has heard colleagues including middle managers discussing energy bills and what impact this will have on working from home.

He told MailOnline: ‘I’ve been leading teams for years, but this week is the first time I’ve heard a lunch time conversation about energy bills in the office.

‘Even middle managers in our organisation seem alarmed and concerned about the increasing cost of energy and the next increase expected in October. One of our team predicts his energy bills will be close to £500 a month – ‘more than my car’.’

 

He added that the company has office space in Birmingham city centre which is open 24/7 for employees, and he expects many staff will ‘forgo the right to work from home this winter as they quickly weigh up the cost of fuel to get to work versus the cost of fuel to heat their homes’.

Can you still claim a tax relief on working from home? 

The Government has changed the rules on who can claim tax relief for working home. Here is the latest guidance taken directly from Gov.UK:

Working from home

You may be able to claim tax relief for additional household costs if you have to work at home for all or part of the week.

If you previously claimed tax relief when you worked from home because of coronavirus (COVID-19), you might no longer be eligible.

Who can claim tax relief

  • You can claim tax relief if you have to work from home, for example because:
  • your job requires you to live far away from your office
  • your employer does not have an office

Who cannot claim tax relief

You cannot claim tax relief if you choose to work from home. This includes if: 

  • your employment contract lets you work from home some or all of the time
  • you work from home because of COVID-19
  • your employer has an office, but you cannot go there sometimes because it’s full

What you can claim for

You can only claim for things to do with your work, such as:

  • business phone calls
  • gas and electricity for your work area

You cannot claim for things that you use for both private and business use, such as rent or broadband access.

How much you can claim

You can either claim tax relief on:

  • £6 a week from 6 April 2020 (for previous tax years the rate is £4 a week) – you will not need to keep evidence of your extra costs
  • the exact amount of extra costs you’ve incurred above the weekly amount – you’ll need evidence such as receipts, bills or contracts

You’ll get tax relief based on the rate at which you pay tax.

Example

  • If you pay the 20% basic rate of tax and claim tax relief on £6 a week, you would get £1.20 per week in tax relief (20% of £6).

You’ll usually get tax relief through a change to your tax code.

Samuel Mather-Holgate, an independent financial advisor at Mather and Murray Financial in Swindon, said that a ‘flexible approach’ will probably be the preferred option of most staff and employers.

He told MailOnline: ‘Although energy bills at home are going through the roof, the cost of commuting and the time it adds on to your day are real bugbears.

‘If you do work from home you can claim some money back from HMRC for the cost of heating your home. It will mean doing a self-assessment, the entitlement isn’t overly generous, but with bills going up it will be more worthwhile. ‘

However, the working from home tax break that saw people able to claim tax relief worth up to £125 a year during the pandemic has now become harder to claim.

You can no longer claim it if you choose to work from home, such as if your employment contract lets you work from home some or all of the time; you work from home because of Covid-19; or your employer has an office, but you cannot go there sometimes because it’s full.

But you can claim the relief if you have to work from home because your job requires you to live far away from your office; or your employer does not have an office.

And you can only now claim for things to do with your work, such as business phone calls; and gas and electricity for your work area. You cannot claim for things that you use for both private and business use, such as rent or broadband access.

One suggestion that has been put forward for helping remote workers to save money on their energy bills this winter is to open up community spaces as co-working environments.

Dr Marianne Trent, clinical psychologist at Good Thinking Psychological Services in Coventry, told MailOnline: ‘It’s always nice to have choices and control. 

‘A church local to me have announced that they will be having an ‘open door’ programme where they heat their function room and make food freely available.

‘People are welcome to come along to keep warm and get nourished too. It would be wonderful to see this rolled out across the country and being used by a cross-section of the community so that people working remotely could use it as a flexible work space too.

‘This would be better for the environment than heating lots of separate homes too.’

Kirklees Council in West Yorkshire is among the local authorities considering whether community centres and libraries could offer warm spaces for people this winter, according to the Dewsbury Reporter.

Its chief executive Jaqui Gedman said last month that consideration was also being given around remote workers who may wish to return to the office to mitigate against of the financial problems posed by the cost of living crisis.

Latest figures on rail passenger numbers published by the Department for Transport last week revealed that they are now close to pre-pandemic levels.

Every day of the week between July 6 and 17 had numbers at between 90 and 93 per cent of pre-Covid levels – with the same figures seen between June 10 and 20.

On London’s Underground, passenger numbers are now close to 80 per cent of pre-pandemic levels, although figures of between 85 per cent and 118 per cent have been recorded since May on weekends and bank holidays.

 

Louise Skittrall, HR expert at Swindon-based Robinson Grace HR Consultancy, told MailOnline: ‘The cost of living increase is hitting hard, and with further energy price rises due in October, things are set to get worse. 

BP sees earnings hits 14-year high amid anger over profits 

BP has revealed second-quarter profits more than trebled to a 14-year high as it joined rival Shell in reaping the benefits of soaring oil and gas prices.

The oil giant yesterday reported underlying replacement cost profits – its preferred measure – jumping to a far better-than-expected £6.9 billion for the three months to June 30, up from £2.3 billion a year ago.

BP delivered cheer to investors, with a 10 per cent rise in the dividend shareholder payout and by ramping up its share buyback plan with another £2.9billion due before the end of September.

Yet the result comes as households are struggling to meet rocketing bills and anger is mounting anger over massive profits from oil and energy firms following bumper results from Shell and British Gas owner Centrica last week.

BP also warned that there is not expected to be any let up with energy prices over the summer, forecasting that crude oil and gas prices will remain high over the third quarter due to supply disruption from Russia.

But BP’s reported half-year figures were impacted by a massive £19.9billion hit from the firm’s move to ditch its near-20 per cent stake in Russian oil producer Rosneft in response to the Ukraine war.

This left it with statutory replacement cost losses of £13 billion, against profits of £4.7 billion a year earlier. 

‘For many who have embraced remote or hybrid working, this may prompt them to reflect on whether it’s more cost effective to commute to a warm office, or remain working from home and heating their workspace.

‘Whilst this may lead a few to transition back to the office, I think the more likely scenario is for staff to ask for a working from home allowance if one is not already paid by their employer, or for a review of the working from home allowance if they are already in receipt of one.

‘In the same way that we have seen the National Living Wage embraced, it would be easy to see a wave of campaigning begin to ensure that all employers offer a working from home allowance, providing a contribution to electricity and heating.’

She said that Britons are used to the rush to buy fans and cool mats in the summer months, but retailers are now likely to see increased demand for portable heaters to enable households to heat just the office space rather than running the central heating all day.

Ms Skittrall added: ‘The benefits of working from home post pandemic versus escalating fuel costs is yesterday’s conundrum. 

‘Today’s dilemma is focused on heating your home versus the cost of commuting to the office, and weighing up the financial impact of these options.’

But Liam Molesworth, co-founder at healthcare consultancy Mprove in Birmingham, said he does not think the public are yet thinking as far ahead as winter, given that UK’s highest ever temperature of 40.3C (104.5F) was recorded just over a fortnight ago.

However, he told MailOnline: ‘With the cost of heating a home predicted to rise up to £3500 per year, it will soon be on the forefront of everyone’s minds.

‘As a business we give our employees access to our offices 24 hours a day, 365 days a year which I hope helps any of our staff save money this winter and I would suggest any business owner, if possible, offers the same.’

While many workers are still reluctant to head back into the office full-time, the heatwave did lead some to go back in to enjoy the air conditioning in workplaces. 

But, looking ahead to colder temperatures this winter, Rachel Hayward, managing director at business consultancy Ask the Chameleon in Derby, told MailOnline: ‘I’ve always had a tendency to wear many jumpers when writing from home in the past rather than put the heating on, and I am left wondering how many more layers I will need to wear this winter, before I am unable to reach the keyboard.

 

‘The biting cost of energy is looming large, and I will be weighing up the costs of hot desking in Derby versus the heating bill. My work has always been a rollercoaster in sales – tenders and bids wait for no woman – and I will need to make adjustments once more in my business outgoings. 

Up to £645m available for money-saving green upgrades for buildings 

Up to £635million is being made available to schools, hospitals, leisure centres and town halls for green energy upgrades, the Government said.

Environmental campaigners welcomed the move to insulate and install green energy tech in more public buildings, but criticised a failure to provide extra funding for upgrades for millions of households who face poverty this winter.

The funding for public sector organisations in England will help install low-carbon heating such as heat pumps and energy efficiency measures including double glazing and loft insulation.

It is the second part of more than £1.4billion due to be allocated through the public sector decarbonisation scheme between 2022 and 2025, the Business Department (Beis) said.

Green upgrades will help public organisations and taxpayers save an average £650million a year on energy bills over the next 15 years, Beis officials said. Organisations such as NHS Trusts, schools and local authorities will be able to apply for grants from September.

Installing low-carbon heating systems powered by cheap, clean renewable energy will help organisations cut their use of expensive polluting fossil fuels, and support thousands of jobs in the clean tech and energy efficiency sectors, the Government said.

‘Sensible practice though this may be, I am worried, but also extremely concerned for my fellow small business owners who are already struggling and vulnerable people in my community. These past few years would test Hercules.’

Cornwall Insight’s principal consultant, Craig Lowrey, said surging gas prices and concerns about Russian supply had prompted the increase in its forecast for gas and electricity bills this winter.

‘However, while the rise in forecasts for October and January is a pressing concern, it is not only the level – but the duration – of the rises that makes these new forecasts so devastating,’ he told BBC Breakfast yesterday.

‘Given the current level of the wholesale price, this level of household energy bills currently shows little sign of abating into 2024.’

Dr Lowrey joined other experts in saying Government support will ‘only scratch the surface’ for households.

‘While the Government has pledged some support for October’s energy rise, our cap forecast has increased by over £500 since the funding was proposed, and the truth is the £400 pledged will only scratch the surface of this problem.’

Last Friday, Richard Neudegg, director of regulation at Uswitch, called for the £400 Government rebate to be increased to at least £600, and for payments to vulnerable households to rise from £650 to £950.

‘The Government did the right thing by stepping in with wide-reaching support to try to help ease the blow. However, this support now looks like a severe under-estimation of what consumers need,’ he said.

‘Households need clarity to help them plan for the most expensive winter in living memory.’

Charity National Energy Action last month predicted that, should the average bill reach £3,250 per year, 8.2 million UK households will be in fuel poverty, or one in three.

A spokesman for Uswitch told MailOnline: ‘Working from home during the colder months often means having the heating on a lot more, and using extra gas and electricity for cooking, making cups of tea, televisions and computers.

 

‘The amount of extra energy households use will vary from home to home, but assuming a household with medium annual usage is at home for an extra 50 hours per week, we’ve estimated that they could use around 25% more electricity and 75% more gas per day this winter.

‘Across a whole year, this could increase bills for people on Standard Variable Tariffs by almost £686, hitting £191 extra a month in January.

‘For most people who don’t have a significant commute, working from the office is likely to be much more economical this winter.’

It comes as BP revealed second-quarter profits more than trebled to a 14-year high as it joined rival Shell in reaping the benefits of soaring oil and gas prices.

BP also warned that there is not expected to be any let up with energy prices over the summer, forecasting that crude oil and gas prices will remain high over the third quarter due to supply disruption from Russia.

Joshua Warner, market analyst at City Index, said the upcoming rise in the energy cap for households was a ‘recipe that should continue to deliver bumper earnings for BP and other oil and gas giants’.

The Government is introducing a windfall tax on the profits of energy companies, but it has faced criticism for giving strong incentives to allow companies to invest in oil and gas, while there are no tax incentives in the policy for green investment. 

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