UK home-workers set to spend £1.47bn extra on heating over next 2 quarters

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As the UK experiences its second coronavirus wave, the number of employees working from home or furloughed under the government’s job retention scheme has been steadily increasing.

And some businesses are reportedly planning to make home-working a permanent cultural shift by continuing a working-from-home policy even after the pandemic is behind us.

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As the summer has faded and the number of UK coronavirus cases has been rapidly climbing again, the question dawned on us: with around 14 million UK workers currently furloughed or working from home, what impact will this have on the nations’ heating bills this winter?

We delved into the data and did some mathematics to find out.

Key findings
  • Heating costs set to rise 47% over winter period for households working from home full time

  • Homeworkers should budget an extra £197 for increased home heating costs over the winter period

  • Average gas bill in the UK set to rise to above £900 for households which have switched to working from home

  • 13.78 million extra people either working from home or furloughed this winter will collectively pay £1.47 billion extra on heating their homes / workspaces over the next 2 quarters

Full data table

(a) Percentage of workforce homeworking resident in each UK region, Jan-Dec 2019. (b) Homeworking rates, by region, of those in employment (aged 16 years and over), UK, April 2020. (c) Percentage increase from 2019 to 2020. (d) 2019 average annual household bill (average of credit, pre pay and direct debit). (e) Proportion spent on space heating (72%) (f) Proportion spent on space heating in winter (85.6% of 72%) (g) Average hours per day using heating, pre-covid data. (h) Average number of hours per week using heating, pre-covid data. (i) Extra hours heating required if working from home full time (j) Extra heating hours counted at 66% of existing average heating hours to account for existing common two phase heating pattern. (k) Total estimated increased heating cost over winter for full time work from home household (based on average household size). (l) Increased heating cost for full time work from home household per month over winter. (m) Increased heating cost for full time work from home household per day over winter. (n) New total yearly gas bill for full time work from home households. (o) Percentage increase in heating costs for full time work from home households.

Map: average annual gas bill set to climb for those furloughed or working from home

Our data modelling above uses a national average gas bill for the purposes of our calculations. However, as you’d probably expect, the cost of domestic gas across the UK varies by region. We’ve shown the variation below, to indicate how the average gas bill might vary by region.

Table: Average annual domestic gas bills in 2019 for GB regions

Methodology

1. Increase in space heating spend for average UK household where one or more members now work from home full-time

We took the 2019 average annual household gas bill by region1 and looked at the usage spent on space heating in a normal year (72%)2. To model heating demand over the winter we took UK government gas consumption data for the past winter of 2019/2020 and found that 85.6% of all space heating demand occurs within the 2 winter quarters3.

Pre-covid the average number of hours heating usage per day in the UK was 84. This usage is often distributed as a two phase pattern on weekdays when occupants are out at work5. To arrive at the figure for households with occupants now working from home we accounted for an extra 40 hours of extra space heating demand to cover the average 9-5 working day. We billed these hours at 2/3rds of the cost of the average existing hours to account for residual heat from existing morning / evening heating patterns6.

2. Total extra heating spend over winter due to furlough and working from home across the UK

Estimates for June to August 2020 show 32.59 million people aged 16 years and over in employment7. Of these 32.59 million, 47% were either working remotely or on partial or furlough leave (15.31 million people)8. In 2019 pre-covid 4.72% of the working population were working from home (1.53 million people)9. From this we can estimate 13.78 million more people are either furloughed or working from home as we approach winter in 2020. 1.85 is the average number of working age people in all-working households10. To estimate the number of households which could be affected by extra costs due to one or more members working from home we divided the number of extra people working from home (13.78 million) by 1.85 to arrive at a figure of 7.44 million households affected.

Sources

[1] https://www.gov.uk/government/statistical-data-sets/annual-domestic-energy-price-statistics

[2] https://www.sciencedirect.com/science/article/pii/S0301421518307249

[3] ET_4.1_SEP_20.xls – https://assets.publishing.service.gov.uk

[4] https://www.ovoenergy.com/guides/energy-guides/average-room-temperature.html

[5] https://link.springer.com/article/10.1007/s12053-018-9632-x

[6] https://www.sciencedirect.com/science/article/pii/S0360132313002540

[7] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/employmentintheuk/october2020

[8] https://www.ons.gov.uk/businessindustryandtrade/business/businessservices/bulletins/coronavirusandtheeconomicimpactsontheuk/10september2020

[9] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/articles/coronavirusandhomeworkingintheuklabourmarket/2019

[10] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/workingandworklesshouseholds/apriltojune2020