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Is London weighting under threat?

Written by: Chris Thompson
Employees in the capital have benefitted from higher wages to cover the higher costs of living in the city. But with London weighting being questioned amid the pandemic, here’s what you need to know.

London weighting is a concept first introduced in 1920 by the London Pay Board. Originally it was designed to encourage key workers, such as civil servants, teachers, airline employees, PhD students, police, and security officers, to stay in Greater London by offsetting the increased cost of living in the city compared to suburban, or country areas.

Historically it was paid as a fixed allowance, set by the Mayor of London alongside the government, but since the abolition of the London Pay Board, no organisation has been responsible for setting London weighting. Instead, if you live and work in London, you are likely to be paid a higher wage than those living elsewhere in the UK, to help offset the additional expense in the cost of living.

Why could London weighting be in doubt?

The landscape of city working has changed dramatically over the past two years. In March 2020, everyone who could was ordered to work from home, an order which remained almost universally in place until January 2022.

Throughout those two years, some workers were still receiving the inflated pay that included London weighting. However, in many cases they were not incurring the same level of costs associated with working in the capital, through expenditure such as train travel.

Even now, many are not back in the office full time as was the norm pre-pandemic. Indeed, it has been widely reported that Jacob Rees-Mogg’s calls for the UK’s civil servants to return to the office full-time have been almost unilaterally ignored.

For employers it can seem as though they are shelling out thousands of pounds a month on office space that few are using, and paying employees large salaries even though they aren’t always in.

Can workers be stripped of the London weighting benefit?

Effectively, yes. London weighting is not a right enshrined by law. It’s more of a common understanding among employers in the capital that it costs more to live and work in London, and so employees should be paid in line with this.

But at a time when business costs are spiralling, profit margins are being squeezed, and budgets aren’t stretching as far, it could be tempting for many employers to save money by reducing their wage bill, which for many is their biggest outgoing.

Should workers be stripped of the London weighting benefit?

In my opinion, certainly not. Whilst employers may be annoyed that they have staff avoiding the office, viewing that people working from home, either full or part-time, despite the pandemic being largely behind us, are ‘saving money’ is an incredibly simplistic line to take. London weighting doesn’t just offset the cost of travel. Rent, food, entertainment, almost everything a person encounters in their everyday life in and around London is likely to come at an inflated cost compared to the rest of the nation.

Let’s not also forget that there is currently a cost-of-living crisis. If anything, London weighting could be unlikely to go far enough.

I fear that the reputational hit to any employer that stripped their employees of London weighting pay would be irreparably tarnished. To do so is effectively demonstrating that they are likely to be out of touch with living in the modern day. During the pandemic, empathy and understanding became the most important things an employer could offer and in response, many have introduced new wellbeing policies. Removing London weighting somewhat flies in the face of this.

How can workers negotiate better pay?

Workers should approach the conversation with their employer similarly to how they would any kind of pay rise. Authenticity, honesty, and professionalism are key. You should be able to clearly communicate why better pay is needed and deserved.

It is also worth keeping in mind that whilst employees’ costs are rising, so are businesses. Employers have a responsibility for looking after their staff, of course, but unfortunately, it’s not as easy as simply paying everyone more. Generating more sales, greater output, and improved productivity will be some of the solutions employers need from their staff to help their business beat inflation.

Chris Thompson is partner at accountancy firm Wellers  

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