Cost of living: Is it cheaper to work from home or in the office?

The energy crisis has sparked significant concern for people who work from home. Credit: Pexels

It was widely thought that the pandemic would spark a permanent increase in home working.

But soaring household bills, partly driven by the war in Ukraine, have shattered that assumption, with ever-rising energy costs tempting many people to reconsider commuting to their warmer workplaces.

As the cost-of-living crisis continues to deepen as we enter autumn, we compared the typical costs of working from home with those incurred when in - and travelling to - the office.

Of course, these costs will vary hugely from person to person, but you will be able to get a general sense of the main expense differences.

Working from home costs:

  • Energy

The price cap rise for millions of households across Britain will send the average yearly energy bill from £1,971 to £3,549 in October, with further surges forecast for the winter.

Remote workers use 75% more gas per day over the winter months and 25% more electricity than those in the office five days a week, analysis from price comparison site Uswitch shows.

Larger households with a higher energy consumption are likely to pay £513 a month, rising to £698 for those who are working from home.

Occupants of smaller homes like flats are likely to pay £243 on average a month for their energy bill, rising to £330 for those working from home.

Home offices can be particularly expensive to operate in winter, when energy consumption rises as more gas and electricity is used to heat homes and keep lights on for longer.

“Using extra energy when the heating would usually be off will be especially noticeable on bills this year with prices rising by 80%," Uswitch energy spokesman Ben Gallizzi said.

“Not only do people working from home use more energy staying warm, they are also cooking lunch and making cups of tea, as well as running computers, TVs and phone chargers."Some 14% of Britons plan to spend more time working from the office to reduce home energy bills, a figure that rises to nearly a quarter (23%) among 18-24 year olds, according to research by MoneySupermarket.com.

Millions of households are bracing for a difficult winter as energy bills are set to soar further. Credit: PA
  • Everyday appliance use

Increased use of everyday household appliances can cause bills to stack up considerably.

Washing machines, dishwashers and tumble dryers account for 14% of a typical energy bill, as the power needed to heat the water for these appliances pushes up consumption, according to the Energy Saving Trust.

Fridges and freezers account for around 13% of the average household’s energy bill, while lighting takes up around 5%, with 4% spent on powering kitchen appliances, including the hob, oven and microwave.

Working from home will likely increase the use of some of these appliances, especially if children are in.

"If your employer tends to offer things like tea, coffee and snacks, you’ll spend more covering these things yourself," Sarah Coles, a senior personal finance analyst from Hargreaves Lansdown, added.

"You might also have had to spend money converting part of your home into a home office, and kitting it out with a comfortable office chair and desk."

  • Broadband

Openreach - the UK’s largest broadband network - reported a 20% increase in broadband traffic during 2021, up on the previous year when broadband usage more than doubled.

BT, TalkTalk and Vodafone were among the providers that hiked prices for most customers earlier this year, despite households being squeezed by inflation, which currently stands at 10.1%.

BT’s broadband and phone bills went up by 9.3% at the end of March, which it said meant most customers paying an average of £3.50 a month more, while Vodafone and TalkTalk raised prices by a similar amount.

Telephone calls can add to working from home costs Credit: Unsplash/MayGauthier

Critics said such increases hit workers who relied on home internet.

“Even before the cost-of-living crisis, 2.5 million households were behind on their broadband bills," Elizabeth Anderson, chief operating officer at the Digital Poverty Alliance, told ITV News. "And that’s before the eye-watering price increases announced by some of our major broadband providers.

"As the costs of all our essential utilities continue to increase, it’s inevitable that people will be forced to cut back in any way they can – including returning to the office, which hits the family budget through travel costs."

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Going into the office costs:

  • Childcare

Childcare in the UK is among the most expensive in Europe, with typical fees costing around two thirds of families as much as their monthly mortgage and rent payments.

Many parents living in England with children between three and four years old can currently get 30 hours of free childcare per week for 38 weeks of the year.

But there is a lack of cover for the remaining weeks of the year, causing particular financial strain in the context of the cost-of-living crisis.

Parents able to look after their children while working from home can save huge amounts of money on childminders, nurseries and school clubs.

Research has suggested that childcare fees are increasing to an unmanageable level. Credit: PA

Coram Family and Childcare’s 21st annual survey of childcare costs found the average price of a part-time childcare place (25 hours) a week for a child aged under two in a nursery is £138.70 across Britain. The average price of 25 hours of childcare a week for a child aged under two by a childminder is £124.41 a week, the report found.

Megan Jarvie, managing director of Coram Family and Childcare, said: "For many families, the cost of childcare is so high that it simply does not pay to go out to work.

"For some, working from home helps to reduce these costs as they do not need childcare to cover their commuting time, but others will face the same high costs."

  • Commuting

Earlier this year the largest rise in rail fares in nearly a decade added more than £100 to the cost of many annual season tickets. Commuters were hit hard by the price increase of up to 3.8% in England and Wales.

"The cost-of-living crisis is bringing home how unreasonable rail fares are," Bruce Williamson, from campaign group Railfuture, told ITV News. "The fares are always above inflation and become progressively more expensive in real terms and are making it progressively less affordable for most people to commute." "So, when other prices crunch it is not surprising that people will try and save money in any way they can.

"It looks like the government has finally succeeded in pricing people off rail."

The crippling impact of Covid and cost of living crisis means that transport is becoming a luxury for some people. Credit: PA

Transport Secretary Grant Shapps has called for bus fares to be capped at £2 per journey to provide “concrete help” to the most vulnerable people amid soaring energy prices.

Bus fares in London are a flat fee of £1.65 but passengers travelling on services elsewhere in England are charged up to £5.

“As the cost of living crisis intensifies, people will be scrutinising every penny they spend, and this will include the cost of bus travel for commuting," Jonathan Bray, director at the Urban Transport Group, the UK’s network of city region transport authorities, said.

"Where we can, we are introducing caps on fares and other measures to tackle the cost of bus use.

"But by European standards, public transport can be expensive in this country and if it is to become more affordable, then we will need the higher levels of subsidy that are common in Europe.”

  • Driving to work

Despite petrol prices hitting record-highs earlier this summer, driving to the office (instead of working from home) will save UK commuters outside of London an average of £21.16 per month, according to analysis from online news and advice website for small businesses Startups.co.uk.

Office workers in Plymouth will save the most by driving to work, rather than working from home, with a monthly saving of roughly £30. 

London is the only UK location where it is still cheaper to work from home than to drive into work, with people travelling into the city centre set to lose around £21.73 per month in October. 

In January, when the energy price cap is updated again, Startups predict that drivers outside the capital will save £35.76 per month, on average, compared with those working from home full-time.

The figures, based on ONS data, were calculated by analysts working out fuel costs for commuting in major UK cities and deducting them from the mean cost of working from home. 

  • Other unexpected office costs

While the cost of the commute is the most obvious expense associated with going into the office, there are lots of other extra costs that do not immediately spring to mind, though these are often not essential.

"For anyone other than the most organised and disciplined, there will be days when they buy coffee, breakfast, lunch or drinks after work," Ms Coles said.

"And being in the midst of shops may persuade them into impulse purchases."