Goodbye to the ‘Pret economy’ and good luck to whatever replaces it
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Britain’s first packaged sandwich was sold by Marks and Spencer in 1980 for 43p, and the first Pret A Manger opened six years later. It was a decade of economic transformation: city offices were replacing factories as engines of growth, and sandwiches were the fuel they ran on. Pret’s branches are now ubiquitous in the capital city. There are as many on London’s Borough High Street as there are in Wales. The rise of Pret has mirrored the rise of London and, until recently, they both seemed unstoppable.
Yet last week, Pret said it would cut 2,890 jobs, almost one-third of its workforce, after the pandemic wiped out “almost a decade of growth” for the company. The lay-offs are emblematic of the crisis now facing city centres. The CBI, Britain’s biggest business lobby, has warned they will become “ghost towns” unless office staff return to their desks soon. The UK government is launching a publicity campaign to encourage more people back to their workplaces. It’s not just Pret: commercial property landlords, dry cleaners, barbers, restaurants and retailers all depend upon the daily influx of millions of white-collar workers to city centres.
But Britain’s economic geography was under strain even before coronavirus. Good-quality jobs had grown ever more concentrated in London and a few other big cities like Manchester. That didn’t work for the rest of the country, and it didn’t work particularly well for the city dwellers either. High demand pushed up house and rental prices, eating into their pay packets. Median household income after housing costs has risen just 6 per cent since the early 2000s in London, compared with 13 per cent in the rest of the UK. Young people in particular faced an unenviable choice: rent a bedroom in a cramped, expensive flat in a successful city, or stay away and watch your career suffer.
Rising housing costs drove city workers further from the centre. Average commuting times have risen for every age group over the past two decades. London swallowed up huge amounts of public spending on infrastructure, prompting resentment in the rest of the country, but commuters still had to squeeze into overcrowded trains, tubes and buses. Official well being indicators found Londoners to be the most anxious and unhappy in the country.
High housing costs were particularly problematic for the low-paid workers who made the cities run. Increasingly, only migrants seemed willing to accept low wage jobs cleaning offices or making coffee. In 2017, Pret’s director of human resources told parliament that just one in 50 of its job applicants was British. Later that year, the Financial Times interviewed a Pret worker from Romania who woke at 3am to commute an hour and a half from East Ham to the branch in Waterloo. She was paid £16,000 a year. The “Pret economy” was beginning to feel unsustainable even before the government promised stricter immigration controls on lower paid workers after Brexit.
The pandemic has made a different future possible. The experience of lockdown proved to many employers what they had not quite believed (and would never otherwise have tried): large-scale remote working is effective. Even after the health threat from Covid-19 has passed, it’s likely that many employers will continue to allow staff to work from home some of the time, given the cost savings. The CBI is right to point out that working from home is easier for older workers with larger homes and accumulated social capital at work. Younger staff might well want to spend more time in offices.
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But even they might be tempted to live further out and work from home part-time, if it means being able to buy a house. A Dutch study suggests that people accept a longer commute for every extra hour of the week they can work at home. There are already signs that people are moving away from expensive cities, not just London but also San Francisco and New York.
A drop in the number of commuters to city centres would be a blow for businesses like Pret that were perfectly calibrated for the pre-Covid era of pressure-cooker urban hubs. But there will be winners too. Already, people are spending more money in independent shops and cafés on suburban high streets. New opportunities abound. Pret could buy a fleet of vans to drive around residential areas, playing a tune to draw workers out of their homes for a coffee.
Cities will not die, but their benefits could become more diffuse, with well-paid workers spread further into the rest of the country. The government’s job is to ease this transition, not to harangue people into going back to a world that wasn’t working anyway.
Letter in response to this column:
Pret’s dream of echoing ice cream vans to come true? / From Raj Parkash, London W4, UK