24 November 2022

Powering up the WFH revolution would transform lives – and earnings

By Dave Page

Britain is staring down the barrel of a gun. The tax burden is set to rise to its highest level since the aftermath of the Second World War; inflation is at its highest level for 40 years; living standards are on track for their sharpest drop in six decades; and we are officially on the brink of a year-long recession.

In short, the outlook is grim. But all of the above are symptoms, not the underlying cause. Our fundamental problem is low productivity – low output per worker – which then feeds through into lower wages and wider economic woes.

A lot lower wages, in fact. One expert analysis of the Chancellor’s Autumn Statement finds that average wages would be £15,000 a year more by 2027 if we had sustained the rate of wage rises before the financial crash of 2008/9.

The causes of low productivity are no doubt complex and various. What we do know if that before the crash, output per worker had been rising at over 2% a year since the mid-1970s. Since the crash, it has crawled along at an average 0.5% a year.

Fix the productivity puzzle, and you fix a great deal more.

Research conducted by my digital diagnostics firm Actual Experience points to one simple practical way to boost productivity and, by extension, national output.

But first we have to recognise that the world has changed – almost certainly irreversibly. Working patterns have changed. Before the pandemic, most people went to the office or the factory every day. Now they don’t. As many as 60% of people work from home at least some of the time. They like it and they don’t want to go back to the old daily grind.

Hybrid working – part office, part home – is here to stay.

But here’s the rub. Our digital infrastructure is not good enough to support millions of people working from their kitchen tables.

Almost all of them rely on consumer broadband. This is fine for most social, domestic and pleasure purposes – such as downloading films or posting messages on Facebook. But it is not up to the task of providing the reliability, speed and security of a business or industrial network.

Our research falls into two parts.

First, we work for global corporations, employing 100,000 or more people. Our job is to analyse the day-to-day experience for these workers as they go about jobs in their digital workplace. We identify the ones working unhindered – and the many experiencing digital friction – either in the office or at home or both. And we help their employers pinpoint weaknesses in the digital workplace and fix them.

Second, we asked Savanta ComRes to survey 1,000 home-workers and see how they were getting on. The results were pretty alarming. Nearly nine in ten of them reported having suffered poor or unreliable connectivity, with 26% saying this is a problem they encounter very or fairly often.

When asked if they find working from home stressful due to unreliable technology, as many as 46% with IT performance failings agree. Over 50% of those who have suffered erratic broadband and video and audio dropouts report that these problems make their working day less productive.

Our research for big business clients and the poll point in the same direction. UK productivity per worker – and national output – would be significantly higher if our domestic digital networks were of industrial standard and up to the task.

We estimate that the boost to national wealth would be as much as £60 billion a year – or 3% of GDP.

Why do so many workers struggle with their connectivity relative to office quality? Part of the problem is that many firms do not invest in the broadband equipment of their workers.

Our poll finds that 68% of home-workers are not provided with any financial or logistical support to improve their connection, despite the fact our research shows business standard broadband tends to be far superior in both quality and reliability to the consumer standard.

And they certainly want it, with 65% saying employers should provide the service, which typically costs £500 to £1,000 a year and requires the installation of some heavy duty kit.

The taxman doesn’t help either. Employees are currently taxed for home broadband upgrades as a benefit in kind – akin to the levy on a company car or mobile phone.

With 72% of home-workers agreeing such upgrades should be tax-free, it is clear there is pressure for change.

The productivity nut is not easily cracked. But with WFH a fact of life – and likely to become even more so – bringing the office to the home in the shape of top quality internet connections looks like a sensible and practical step that will pay dividends for all concerned. The cost to HMRC would be a pittance.

Right now we are relying on a digital network never designed to sustain millions of home workers.

We should stop trying to run a Rolls Royce on two star petrol and power up the WFH revolution.

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Dave Page is Co-founder and Chief Strategy Officer of Actual Experience

Columns are the author's own opinion and do not necessarily reflect the views of CapX.