David Harding and Mark Pragnell.

Q119 The Chair: Good morning, everyone. Welcome to this second session today of the Home-based Working Committee in the House of Lords. Thank you very much to our two witnesses today, here to talk to us about the impact of home-based working on transport, cities and rural areas. We are being televised; a transcript will be taken and sent to you in a few days for you to check its accuracy. Please can you just introduce yourselves and tell us a little about where you are from the first time you speak? Please feel free to answer any of the questions or not, depending on what you think. We may ask you for some homework if we find things that take our interest but you cannot answer on them immediately.

I will start by getting a general sense of what data you have on levels of home and hybrid working in the UK, particularly across the different regions. We have talked a lot about London right through the committee’s inquiry, and then earlier today we got a strong flavour from Greater Manchester. Can you expand that out?

David Harding: Thank you for having us. I am the head of the analysis and economics team at Network Rail. We also work very closely with the revenue growth team that does lots of whole-industry reporting on demand and revenue with the train operators. Network Rail is the organisation that operates, maintains, renews and enhances the fixed infrastructure on the rail network. We provide access to train operators that take ticket sales revenue from passengers and manage the customer interface with the passengers.

First, in terms of the data available to us, we have the ticket sales data. That is a comprehensive system of data across our entire network that the train operators own jointly and in several. Network Rail has some access to that and we see some high-level statistics. The industry also carries out what we call longitudinal surveys of demographics and satisfaction, which helps us to understand how home working is changing over time, and the demographics of passengers and how that is changing.

Network Rail buys mobile network data from BT on behalf of the whole industry, which is not just rail usage but usage in terms of total travel across the network. Unfortunately, we do not have that pre-pandemic, but it gives us a much more recent idea of how patterns of travel are shifting.

A lot of that data is published on the ORR website—that is the Office of Rail and Road, the rail regulator—and the Department for Transport’s website. The Rail Delivery Group publishes data on something called the rail data marketplace as well. So more and more information is becoming available.

Mark Pragnell: Good morning—thank you for inviting me to today’s session. I am managing director of a small economics and policy consultancy called Pragmatix Advisory. We have no data, I am afraid. However, we have done a number of reports—first, for a variety of rural related organisations and coalitions, and most recently one for the Rural Coalition, which has looked at rural statistics and performance. This thought about the extent to which there are opportunities in this new world for rural to start to plug some of the gap between rural and urban performance. Back in 2021, we also did a study on flexible working for an organisation called Mother Pukka, which looked at the extent to which there were net opportunities for business to see productivity improvements through offering greater flexibility, fundamentally, in the way in which they structured their working practices. So that is why I am here.

I cannot offer you any data. We analyse data; we do not collect it. A lot of what I am going to comment on today is going to be related to the rural angle, and what I would say is that there is just not enough data. The ONS has done a grand job of trying to respond, post-Covid, to recognising changing work patterns. There are surveys out there, by both the ONS and others, of what those work patterns look like, but they predominantly tell you what the country average is, often with a relatively urban perspective to it. If you see any form of disaggregation by location it is usually disaggregation by region, and the trouble is that regions are as diverse as the country is.

One thing I would like to stress today is the extent to which, if we are going to understand the differences and the different impacts that home working and other flexible working opportunities have—and disbenefits it may have for businesses and households—there needs to be a more nuanced understanding of those businesses and households. For me, one of the things that is missing is that rural dimension, understanding what less densely populated areas are doing, which you just cannot see in a lot of the statistics published around this sort of material.

The Chair: Sorry if this is an obvious question, but when you describe rural areas, do you think about market towns and so on in that? We think about urban and rural, but there are significant-sized populations in towns that are really not urban, are they?

Mark Pragnell: We could get into an absolutely wonderful discussion about what is rural, and there is one to be had. Actually, one of the things I want to say is that no two rural places are alike either. There are different characteristics of geography which are really important to understand to then be able to gauge some assessment of impact.

Some rural areas are rural because they are remote, some are rural because they are sparsely populated, some will actually be quite close to a neighbouring city and some will be a market town within a rural location—so you can define rural in a number of different ways. It also rather depends upon what you are looking at. If you are thinking about classifying local authorities, most have one or two decent-sized towns in them, but you can have rural local authorities. Equally, a parish is typically rural but not always. So there is a lot to be said in terms of understanding the definitions or at least recognising the differentiation between those things.

But for me there is a distinction between what is quite often a relatively urban-centric perspective when we look at data, which is: what does it look like in Manchester or London versus Shropshire or even Surrey?

The Chair: Finally on that, we have heard some very data-rich contributions earlier about Greater Manchester and London. Within that, do they have any way of differentiating between those people who are coming in from a more rural area? Is there any way you can unpick that, because towns, cities and rural areas are interconnected, are they not?

Mark Pragnell: I expect David probably has more information about the extent and the nature of inward commuting. Yes, certainly from my dim and distant past I know that there is not necessarily frequently updated and thorough data, but there is a good understanding of the sorts of commuting patterns that exist.

David Harding: Shall I talk a bit about the commuting patterns we have seen, and the impact after Covid and hybrid working?

The Chair: Yes.

David Harding: What we are finding is that commuting demand is still around 25% to 30% down compared with pre-Covid, so we are about 70% to 75% of where we were in 2019-20. That is quite different depending on whether you look at London or non-London. In and out of London it is around 65% to 70%, but the non-London commuting is around 85% to 90%, so that gives you some sense of the differences that we see. A lot of that is due to the demographics of commuters into London, compared with some of the regional cities, and the opportunity to work from home if you have lots of what I would call knowledge-intensive businesses that employ people in London, compared with Manchester and Birmingham. The structural changes in Manchester and Birmingham are making those differences smaller over time.

In terms of revenue though, commuting is back up to around 85% to 90% of where we were pre-Covid. There are a few reasons for that: we are actually seeing more long-distance commuting, so longer-distance commuting of more than 50 miles makes up about half of our commuting revenue. That starts to speak to some things that were discussed in the previous session around what hybrid working means for your ability to commute into a town or city centre and make use of opportunities that you might not have been able to if you knew you were going to have to work five days a week. So it gives you those opportunities that you might not have had before.

Forgive me, but rail is centred around cities: what rail is best at is getting people into and out of cities and between cities, so a lot of our data and insight is focused on that. But when we look at the longitudinal surveys of hybrid working, what we find is that around 20% of people who use rail for commuting are travelling five days a week, and about 40% are commuting two or three days a week. That has ticked up a bit, and the average has gone from about 2.7 to about 2.9-3.0 in the past 18 months. We find that the barriers to commuting more are largely about cost, but also workplace policies form a minimum and a maximum bound for the amount of commuting that you might do. So as those business policies start to solidify we are seeing some small shifts from three to two, but not massive shifts back up to five days a week.

Q120 Lord Monks: Thank you for coming. You heard the previous evidence session, particularly the Greater London and Greater Manchester stories, and you have been talking a little in that last contribution about how Network Rail is seeing the changes that are taking place. In this committee we are aware that there are certain parts of the country that do well and a lot that do not do well at the moment. Anybody who was interested in the Runcorn by-election last week heard the vox pop descriptions of the high street and so on, which I seem to remember was all bookmakers and kebab shops. There are major areas that are being left behind. As a Mancunian, I was just thinking that for every Stockport there is a Rochdale, and it is a completely different story in those kinds of places.

From the transport perspective—I turn to David on this, and perhaps more generally to Mark—what were the regional effects in what you have experienced during the pandemic? Is regional too big? I mentioned Stockport and Rochdale, which are in same region. Can you break it down to areas particularly affected by the changes in work patterns, which we are looking at specifically? We are not looking at the wider questions of urban problems that I have mentioned. Do you have any insights you would like to share with us on that?

David Harding: We are certainly seeing differences in commuting recovery depending on the demographics of towns and cities. Where towns and cities have less knowledge-intensive businesses, we are finding that the recovery in demand tends to be stronger, but from a much lower base, because actually a lot of the commuting that rail caters to is into cities for those purposes.

A lot of the strong markets for rail go from places with more people than jobs to places where there are more jobs than people, if I can put it that simply. So places like Stockport, Rochdale and Huddersfield tend to have more people than businesses, but providing good connections to Leeds and Manchester is what provides that access to the employment opportunities, and that is what rail and the transport system is there to provide.

I feel everyone’s pain about making sure that we can demonstrate granular data as far as possible, and there is a big unanswered question around what flexible working is doing to land use and employment opportunities more broadly that I do not think I have the right insight on.

Lord Monks: Sorry, Mark, I have a supplementary for David but perhaps you can come in first.

Mark Pragnell: I was merely going to say that one should not expect to see too much in the data. We provide some context to the sorts of things that are happening at the moment; on average, a UK owner-occupier moves home once in more than 20 years. So the types of things that are happening in terms of the changes in the structure of how we live and work occur really quite slowly. We are only a few years after the pandemic and we have competing views on where those things might be going, but I would not expect to see anything other than very minor trends in any data at this point in time because fundamentally these are much bigger structural shifts that could be happening. I am not saying they are happening and I am not saying they are going to happen—I do not know, although I would have a marginal bet on some of them—but fundamentally these are long-term things that are happening. One has to not only look for the data but also think about what we think the plausible underlying drivers are and how reasonable they are.

My long-term perspective on this is that from around the 1980s onwards we had an economy which was very much driven by generating economies of scale in agglomeration benefits. Cities grew because the closer you were to your customers, your labour and your clients, the better you were, and quite often the closer you were to your competition. For some, the closer you got to the gossip the better you were as well. That is not going to go away and I am certainly not going to suggest that cities are dead: that is clearly not the case. But at the margin—and change does happen at the margin—some factors are less important now, with good digital connectivity, than they were 20 years ago. With that you can start to see the potential for changes that may not be significant to cities, but may well be significant changes elsewhere, because cities have so far dwarfed the non-urban areas in lots of economic activity. So relatively small marginal changes to the cities could end up being quite important to, say, rural areas as well.

I am not convinced you are going to find that in the data, although we would love to look for it and see what we can find. But a part of this is about also having a sense of what direction we think we are going in.

Lord Monks: Yes, thank you very much. I will follow up on the Network Rail angle in particular. I have just spent the weekend in the Netherlands, raising this particular subject with members of the extended family. They were very impressed with the Dutch railway system, which is geared to a lot of commuting in a way that we probably are not, outside the south-east of England. Is Network Rail looking to see if there are some lessons there? Because if that can be improved then flexibility and choice can be improved with it.

David Harding: You are probably referring to the economic geography of the Randstad, if I can put it like that, which is a good economic model of what might be achievable outside London and the south-east, and what Mark was talking about in terms of achieving agglomeration between city regions. That is really what we are trying to achieve here: to make the rail and transport system, particularly of the north of England, able to provide connections so that Leeds can agglomerate properly with Manchester and Manchester with Sheffield, in the way that has seen much higher productivity around the Randstad than we have in the regional cities outside London. That is a worthy thing for government to aim for in those areas, but of course that is a question for government, not necessarily for Network Rail.

The Chair: I am just reflecting on Mark’s point about changes at the margins and so on. When you at Network Rail are thinking about future projects, and they are going to be a decade down the road and so on, is there any extent to which potential changing working patterns influence your investment, or are you still kind of holding to see how it pans out?

David Harding: No, there has been a fundamental shift in our investment pipeline over the next 10 to 20 years. If I can put this into perspective: between 2011 and 2018 we saw an 11% increase in the number of people commuting into London in the peak. That caused a 25% increase in standing and a two-thirds increase in standing in excess of capacity. We saw that as a massive problem that needed to be solved and the industry was gearing up to that. We have now had a 25% decrease in the amount of commuting demand into London, so you can see that that 11% has been dwarfed the other way. So actually there is very little in our investment pipeline around infrastructure to meet the needs of peak commuting over the next 10 to 20 years, particularly in London and the south-east.

A lot of our investment pipeline is focused on things like the trans-Pennine route upgrade, which will significantly improve the journey times between Leeds, Huddersfield and Manchester, and longer-term investment like East West Rail and Northern Powerhouse Rail, which are some of the policies that government has in place at the moment, so it has had a fundamental shift.

Q121 Baroness Manzoor: As a Yorkshire woman I am really pleased to hear that you are going to upgrade the trans-Pennine route, because it is a long time coming, I have to say.

I was also pleased to hear from you, Mr Pragnell, about all the data being urban-centric because I have a lot of empathy with that. We do not have sufficient data that helps us to identify some of the issues that people who live in rural communities face.

You touched upon transport connectivity and slightly on digital as well. We have had some evidence before, but my question really is about how do remote and hybrid working affect rural areas compared to non-rural areas, and what is the role of digital and transport connectivity within this? I declare an interest because I live in a small village so I have a lot of experience personally about some of the issues, but perhaps if I turn to you first, Mr Pragnell, and then perhaps Mr Harding, you could follow up?

Mark Pragnell: Thank you. Let me start by saying the evidence base is not strong as to what has happened, and I refer back to the point that I am not coming here with data. But in terms of what we understand, certainly through the conversations we have had and the way we have thought about it, it is very easy to assume that rural communities do not benefit from a home-working revolution because of the nature of the types of jobs and the industries that one associates with rural locations. A very important starting point is to remember that actually the mix of businesses and the mix of jobs in rural areas is not that dissimilar to those in urban areas. Yes, there is a large amount of agricultural real estate in rural areas but they do not actually generate that many jobs. There is substantial overweight in agricultural occupations, and substantial overweight in hospitality and tourism-related jobs as well, although not necessarily in terms of the profits they make and the revenues they get from that tourism. Actually, rural is overweight against urban areas in manufacturing jobs.

So the starting point is just to recognise that rural is different, but it is not necessarily the postcard picture of what people might think the economy is, and with that there are lots of industries and occupations in rural areas that are just as susceptible to home working as they would be in an urban area as well. There is the chance and opportunity for rural businesses to benefit from a wider labour market, and importantly there is opportunity for rural households to benefit from wider job opportunities in the same way that you might see in an urban environment through remote working.

The constriction on that is the extent to which there is decent digital connectivity. It is still the case that 87% of urban premises have access to gigabit tech; it is 52% in rural areas at the moment, so that digital divide is still the big thing that is hampering the take-up of new working practices in rural areas. Most of the existing economy that is in rural areas can benefit in similar ways to urban areas, but it also offers the opportunity for rural areas to become locations from which you can work and do jobs that were previously thought of as being city jobs.

There are pluses and minuses to that trend, and you were speaking earlier about the internal migration statistics. It is the case that you see an ongoing outflow of the population, largely from London, but also other metropolitan areas into rural areas over time. People typically grow older and do not always necessarily retire but certainly end up retired in rural areas rather than in urban areas. That has been the case for many years, but it is actually higher now than it was pre-Covid. The latest data actually has that rate at somewhere like 30% higher than it was pre-Covid, although I am not going to trust it. As I said earlier, these things are not necessarily detectable in the data so I am not going to play on it, but there is a case that we are starting to see those marginal movements outwards. What that means is you get a different mix of occupations and households in rural areas. It is an opportunity to get incomes up in rural areas but there needs to be the housing, sustainable communities and the opportunities for there to be jobs for the local population so that you have communities that can survive and then thrive. That comes down to whether or not there is the infrastructure, the physical as well as the digital connectivity and, importantly, the housing.

David Harding: I do not think I have too much to add to that, except it is obvious to me that transport is an enabler to allow rural communities, or any community, to access employment opportunities elsewhere. If a place is well served by rail and has a station, it is probably not that rural: rail is best in towns and cities and places where there are populous areas. Public transport works best where you have high densities of people, and you would only invest in public transport infrastructure if it can be demonstrably better than the private car in a rural area and provide the access to employment for the right numbers of people. So there is that critical mass argument that needs to be tackled in terms of rural connectivity for public transport.

The Chair: I suppose there is just something that we are kind of trying to get at about people who are living in rural areas: they are still commuting, as you do, but it is just you have to drive somewhere to get to the station, and I wonder if there is car park data and that sort of thing, for example, that can begin to point out to us what is happening.

David Harding: That is absolutely right. One thing we have not quite come to grips with or exploited very well is an understanding of where people that use our stations are coming from and the extent to which they railhead—sorry, railheading is a very railway term, meaning where you travel to a station which is not your local station.

We have some insight which we have not shared very widely: we see some really interesting stuff around south Wales for longer distance trips where people in, say the Cardiff valleys, will drive to Newport in order to get a train on the great western main line to places further out rather than use their local station. We see exactly the same sort of thing in the north-east where the rail network is not particularly dense. Lots of people along the Durham coast will drive to places like Darlington, Northallerton and Newcastle in order to railhead further south. You do not see that in London and south-east because it is far better served into London, and London is the place where you get access to the rest of the country. We are starting to see some indications of how important it is to see rail as nodes in a wider transport system rather than rail for rail’s sake itself, and that is how rail and a broad transport system works well for rural communities.

Baroness Manzoor: Can I just share that of course there are car parking costs too if you live in the rural community because you have to park up and you have to pay, whereas Londoners do not have that.

Just in terms of what you said, Mr Pragnell, of course the fiscal connectivity is really important for our rural communities and they can do other jobs that they perhaps could not do in the past if they are based from home. But many of them cannot be based from home because of their digital connectivity. Do you think that there should be a recommendation to government, with very clear targets for rural communities, to ensure that there is digital connectivity?

Mark Pragnell: It is a complete lost opportunity that we have in terms of an underperforming chunk of the population and economy, and frankly that is quite an easy win in terms of getting UK productivity up. It is a really quite straightforward ask and approach; there has to be some degree of equality of access for digital services.

Q122 Lord Fuller: I am really interested in the urban/rural divide. I know that, when we had a debate before Christmas to try to get some rural statistics, it was really difficult; there was some on local authority data and if we are going to go for local government reorganisation that will make this data even harder to mine in future over larger territories. But that is a slightly separate point.

First, I am interested to know about productivity. We had some evidence last week that when people started to work from home during Covid, productivity went up; people loved to work until seven in the evening, but it soon wore off. I just wondered, is there any data you can point to about the difference in productivity and that movement of productivity over time? What is the “wearing off” quantity?

Secondly, is there any distinction between rural and urban environments? I suppose the question in so far as transport is concerned is, are people able to use the commuting time to work or is it just standing? What is that doing to the national economy? We had heard last week about the new station at Cambridge South. I often railhead to Cambridge North: it is great; there is a big car park there. Cambridge South does not have a car park at all so that is going to be really blind for the future going forward, but I suppose that is just a hobby horse of mine.

David Harding: The point made earlier around how long it takes to see some of these impacts in productivity is really important. I am going to define what I mean by productivity for the sake of the first question: it is the gross value added per capita for employees in a particular location. Let us just define it that way for a minute. There are massive differences in the productivity of the workforce depending on the location of the local authority. So we know that productivity in central London is—these stats in my head are a bit old—around about £40,000 per annum higher than the per capita productivity outside London. So that is the real reason why agglomeration and being able to commute into central London and take part in that productive workforce are so important.

The disparity in that figure in the rest of the country is nowhere near as strong. For Manchester versus Stockport, there is some disparity but nowhere near what you might find between the City of London and outside the City of London. If we think a bit more parochially about the users of rail, how we are finding shifts in working patterns and how that might affect productivity, there are a couple of things going on. We talk about rail as a mode where you can use your productive time well and obviously mobile connectivity and availability of Wi-Fi is a key part of that. One of the plus points of rail that our customers talk about is definitely the ability to work on a train, and that has not changed. We are seeing changes in when people are travelling and how that has changed since the pandemic. We think of commuting as something that happens in the morning and the evening peak, but actually a third of commuting now happens between the peaks, and that tells me something about just how flexibly people are working post-pandemic compared with pre-pandemic. There was a bit of that pre-pandemic but it is much stronger now.

We do not see lots of evidence of people now working very long hours; the spread of the peak and people commuting looks fairly similar. We are not seeing people working 10 or 12 hours a day, or seeing any significant shift compared to pre-pandemic.

Mark Pragnell: You asked three questions, and I am going to answer two of them. One is on productivity—urban versus rural. The second one is on productivity and working from home now versus not working from home. I think you were also asking about working from home productivity and rural productivity. That third one I certainly cannot do but let me go for the other two.

I will give working from home evidence on productivity. Again, I refer to my earlier points that this is still too early in the day to get too excited about what the data says but, none the less, lots of people have had a go at looking at some data. Working from home and remote working was predominantly seen as probably being negative on productivity where it was done prior to the pandemic. There was quite a significant study in Japan that came out very negatively on remote working productivity rates prior to the pandemic and there is a reasonably mixed view thereafter. But, actually, most of the ones that have come through so far have shown some degree of marginal benefit from it in terms of productivity. It is nothing big: again, in terms of where we are in the world and the levels of statistical error that might be involved, I would not necessarily bet my house on it. But there is a little bit of a run of moderately or mildly—however you want to describe it—positive evidence around productivity.

My personal perspective on this is that we are still in the days when businesses have not quite shaken out what the new world means to them. There are businesses that have performed well and there are businesses that have not performed well, and it is somewhat to do with the management attitude to working from home: it will work for some businesses and not others, and it will work within some managerial regimes and not others.

If I may, I will be really naughty and use my own personal experience for this. Despite being an economic forecaster by profession, I set up my business in January 2020, which left me without much of a business by March 2020. With that, I had no choice but to go entirely virtual. I would have never dreamed about it prior to that. It is a tough way of doing business; there is no getting around it. I manage a small team with a wide range of ages and experiences, and it is tough to do it online. But once you get into the swing of how to do it online rather than how you would have done it if you were in an open plan office, actually it is doable. I am not saying that it is doable for all organisations: we were lucky, I was lucky, et cetera. But there is an element of how we are still going through the management shake-out post-Covid—how do we make best use of our human resource, fundamentally, in a new world?

Be under no illusions about it: it is good for business if you can offer your employees flexibility in the work environment. Fundamentally, they will be more loyal. They are more likely to have reduced levels of absenteeism. You have higher rates of retention, and you spend less on having to get new people in. There was a significant evidence base for that prior to Covid and that is still the case now—it is just whether businesses can learn to adapt and manage in those circumstances. So that is the answer on working from home versus not working from home.

On urban versus rural, there is a dramatic difference between rates of productivity between rural—however you want to define them—local authorities and areas versus urban ones. Especially against London, but actually against all the main metropolitan areas. It is not to do with the mix of industries: it is actually probably better off because of the mix of industries. This is because a bank in Shrewsbury is less productive than a bank, which is probably more likely to be a merchant bank, in London. A really important example is agriculture. You see much more GVA created in London in agriculture per capita than you see it anywhere in the rural areas because that is where the profit is booked in GVA.

So there are some statistical wonders that you have to reflect but more importantly, because of the economics of agglomeration, unsurprisingly, rural is less productive than urban. However, the work we have done for the Rural Coalition demonstrates that not only do we have lower rates of productivity in rural areas in England than in urban areas in England but the ratio—the difference between rural and urban—is much worse in England than it is for most of our main competitors. We have worse-performing rural economies in England than you will see elsewhere in the G7, relative to their national averages, and than you will see elsewhere in Europe, other than eastern Europe.

So, as I said earlier, we have seen the economy grow over the last few decades through very strong growth in metropolitan areas, really maximising those economies of agglomeration, but we have also seen rural areas fall behind. A part of the, “Can we get a digital revolution into the rural areas as well?” rethinking about what the business models might be is a way in which we can hopefully leverage the narrowing of the gap between rural and urban areas. This is a really substantial opportunity to improve national productivity by improving the physical connectivity, the social infrastructure and the digital infrastructure in rural areas.

Lord Fuller: Thank you very much. I am conscious we are just about to hear the Division Bell so I will quit at that point.

The Chair: We will have a pause for a few moments because we will shortly be going into two minutes of silence.

The committee paused for two minutes of silence.

Q123 Lord Parker of Minsmere: I will follow on from what Lord Fuller was asking about. Mark, you made very interesting remarks about productivity, which is something we spend a lot of time on with people we hear from because it is so important. We completely get what you say—that it is early days and it is hard to draw hard conclusions. It is easy to metaphorically wave one’s arms around and talk about trends where there just are not enough data points to draw lines. It has also been very difficult for us to deal with data where quite a lot of it is actually self reported by employees who feel more productive because they are not commuting on days when they are working at home. But that gives no extra value to the employer. So getting those biases out has been really hard, but thank you.

Moving it on a little, on the specific issue of regional disparities and economic disparities, I turn specifically to employment and unemployment and the extent to which these different styles of working give opportunity for greater inclusion of people in the workforce. Can you say anything to us about that? Have you done any work in that area? Can you offer us any picture of that currently?

Mark Pragnell: Again, I will say that there is not a great deal there in terms of data. My observation for this, especially in relation to rural communities, is that I am not too sure that this relates mostly to unemployment. Actually, the interesting thing that is coming through from a more digitally based workforce, as it were, is the extent to which it has an impact on economic activity. So I would not be surprised to see very little in the future in terms of the impact on the unemployment levels because of working from home. But the question is the extent to which, again at the margin, there are people who are now able to do some work who were previously unable to do any, or people who are able to step up a little and do more work than they would previously do. So for me I suspect this is actually more of a facilitator of economic activity than necessarily something that will play out into the jobless numbers.

Lord Parker of Minsmere: Thank you. David, do you want to add anything?

David Harding: I do not have anything to add on that.

Q124 Baroness Freeman of Steventon: Continuing on our data search, if you were in our position and trying to study the effects of home-based working and the different patterns of work, where are the big gaps of data that you know about? Where are the pools of data that we might not know about? When we are giving recommendations for the future, we are likely to be saying we need to be collecting data so that we look at these trends. What should we be recommending is collected—more ONS type data, more administrative data or more individual companies sharing data? Should we be doing more surveys specifically?

Mark Pragnell: I am going to say all the above. But I have a couple of observations in terms of where we are becoming a little unstuck in this topic: traditionally, official data has thought about the labour market from one of two sources. Either from the employer saying who is working for them, or from a household survey asking people what work they do. The former is really easy to categorise by an industry; the latter we can categorise relatively easily by an occupation. Sadly, very rarely do the twain meet. What is really important in understanding the nuances around home working and its impacts is understanding that link between what people are doing in their jobs and what industry they are in. That is often quite lacking in the data. This is possibly not the best of times in terms of pushing for more in official statistics on the labour market, but the extent to which there is a need to better understand the relationship between the type of business and the type of work would give us more understanding of how these things are working.

The other point that I would make around trying to assess data is that we are in a world where nobody has really decided what remote working means. There are some ONS phrases about whether you were 100% remote working last week and all this sort of stuff that can be deployed, but we do not yet have that typology—we do not yet have that language in place—that allows us to really describe the different working practices that we might have. I am going to make a plea here: please do not think of this purely as home working. It is also about different flexible working metrics. Getting a better language and therefore a better characterisation of how people work, that we can then collect statistics on, is the starting point of then understanding what works and what does not work. I do not think we are there yet.

The Chair: To be clear on your last point there: the nature of our committee and the remit we have means we are focused on people who work from home some or all the time, but we do not use the term “flexible working” because we are mindful of the fact that that encompasses a whole range of other things. You were talking about people working different hours, not going in at peak times and compressed hours—all sorts of different things. But you are saying that, in terms of the data, there is something to be understood from the total picture.

Mark Pragnell: My strong view is that we should be looking at the way in which the working environment has changed over time so that there is a different offer being made by employers to their staff. For some jobs they cannot have remote working, but there are other ways in which employers can demonstrate flexibility. If we start to look at flexibility generally and think about the benefits that brings to the employees—but also importantly to the employer by potentially having a more motivated and more loyal workforce, et cetera—that is the perspective I would take on this. Remote working is one part of that.

David Harding: I have a couple of things to add. I cannot decide whether the census was badly timed or the pandemic was badly timed. But the census was our way of getting an understanding of the cross-tabulation between where people lived, where people worked, what occupation they were in, what industry they were in and their working practice. It was entirely useless because it was bang in the middle of the pandemic. As a data geek, I would like a census every day if I could have one, but the more that we can do to have cross-tabulated data which is big enough that you do not have big errors in your sample, the more information we are going to be able to generate for inquiries, evidence and our planning long term. So I cannot wait for 2031, as long as there is not another pandemic, I guess.

The one area where we are significantly lacking, and that I think we can do something about, is our understanding of people of reduced mobility—people who are disabled and people who are in marginalised communities—and their ability to work remotely and work in a hybrid fashion. How does that change their opportunities to work? Any study that is longitudinal tends to have such a low sample size for those people that it is almost useless. So having longitudinal surveys that are specific to that point would be incredibly useful.

The Chair: Our last panel was predominantly about transport. Are there any gaps in our understanding of transport data, and is everything Network Rail publishes open source?

David Harding: Network Rail does not own any passenger data itself. Because sales data is owned by the train operators and is commercially confidential, almost none of the revenue data is published. The ORR publishes annual accounts for all the train operators where you can understand the amount of revenue that they are taking, and we are starting to publish more on the rail data marketplace. So now there is an annual origin destination matrix of the number of people who travel between every pair of stations on the network. That is quite a recent thing that has happened.

Baroness Freeman of Steventon: Does that include the timings of when they make those journeys?

David Harding: No, it is the whole year. The DfT actually publishes information on how busy trains are into cities by time of day and into each of the London termini, so you get a sense of the profile of demand. There is the potential for more data sharing from the train operators once rail reform starts to kick in, when a lot of them come under public ownership and there is single accountability for policy decisions around the sharing of data. I think that is an opportunity.

Q125 Baroness Watkins of Tavistock: This is really just a final question on behalf of everybody. If you feel it is appropriate for you to comment, which one recommendation would you make to the Government about remote and hybrid working?

David Harding: Network Rail is an arm’s-length body so I do not think it is appropriate for us to give a position on government policy.

Mark Pragnell: Can I have two then?

Baroness Watkins of Tavistock: Yes, absolutely.

Mark Pragnell: The first one, from a rural perspective, is that there is a great opportunity there to be had, but we do need rural broadband.

The second point goes back to the point I made earlier: the issue of generating the productivity benefits out of this comes in terms of management in business, and I would argue that government should not look at this as being something about rules, legislation or regulation Actually, this is something about information and education in terms of getting best practice out.

Baroness Freeman of Steventon: Can I ask David one question about the effects of the changing working patterns on the financial planning around trains? Obviously, things like season tickets are going to be affected by people choosing to work only two days a week, so how is that affecting the planning of ticket pricing and service generally?

David Harding: It is affecting it quite a lot. The year before the pandemic, the industry took in £10.4 billion in passenger revenue in nominal terms—so not accounting for inflation. In the year 2023-24 we also took £10.4 billion in revenue, but of course a lot happened in that time so our costs went up, the tickets and inflation went up, and the Elizabeth line came in—it actually caused about a 3% or 4% increase in the revenue that the industry was taking. The Elizabeth line has been massive for us; it actually makes up about 14% or 15% of all the journeys on rail, so it is huge.

What that means is that if we take that into account, we are probably about 20% lower than we were pre-pandemic, accounting for inflation and the Elizabeth line. That is not accounting for any of the employment, productivity or other demographic changes that might have happened had the pandemic not happened. So we might be £2 billion or £3 billion down in terms of passenger revenue, and our cost base has had some pressures on it as well.

The energy crisis obviously causes a massive issue for us because we use an awful lot of electricity and diesel to run our trains around the network. The Office of Rail and Road published statistics on the government support required by the rail industry. Pre-pandemic, that went from £4 billion to £8.5 billion in today’s prices, and that is now about £12.5 billion for 2022-23 and 2023-24. Both those years were about the same, so it has had a massive increase in the amount of subsidy required by our network, which why there is such a big push on revenue recovery.

It has also changed the way that we try to sell tickets. The train operators—Network Rail does not set fares or anything like that—have put more advance purchase tickets into the peaks, and there is more availability of advance purchase fares. Season ticket revenue now makes up something like 5% of all demand, whereas it used to be 20%. We used to have a sure thing around the amount of money coming in from season ticket revenue, but that is no longer a sure thing. So it has changed the way we plan our train service and plan our prices.

It has also changed the way we give engineering access, because the time of day and week that people travel has changed. We are investigating taking a Saturday-to-Monday blockade, instead of a weekend from Friday to Sunday. So it has had a fundamental shift, and the more we can do to integrate as a rail industry so that we are providing rail services for a changing market, the better.

The Chair: That is great. Thank you both very much; it has been a really interesting session and we really appreciate your input today.