Saturday 11 October 2025 5:38 am
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The UK’s significant productivity crisis is exacerbated by outdated and inefficient office environments, and improving these workplaces is a practical and cost-effective starting point for businesses to boost national output, employee efficiency and staff retention, says Phil Bentley
Last Friday, The Office for Budget Responsibility submitted its latest estimates for the UK economy to the Treasury. If newspaper reports are true, they make for grim reading. That, although the UK’s productivity figures have hardly been stellar for years, the truth is worse. The OBR’s likely downward revision to the nation’s productivity statistics – and the resulting reduction in its estimates of the size of the UK economy – has made an already grim picture even grimmer, with our efficiency and output as a nation now lagging woefully behind international competitors such as the USA, Germany and France.
While the immediate focus on the OBR’s work has been on the impact it will have on the Treasury’s Budget forecasts, it is also a moment to stand back and debate why Britain has a productivity crisis, and what we can do to address it.
It is clear at the outset that the causes are complex but that two of the main drivers are a long-standing under-investment in technology and automation, combined with an under-investment in skills. This is the reason that my company Mitie spends more than £100m a year in technology, investment and training.
It is tempting to dismiss these statistics as mere economic numbers, divorced from the real world. Nothing could be further from the truth – productivity is a critical measure of not just economic success and prosperity, but of our lives and wellbeing. If people have the opportunity to do valued, skilled and productive work, the workforce grows, economic growth rises and society as a whole thrives.
The average UK office is 53 years old
There is one other root cause of Britain’s under-productivity that we have been researching in recent months – the quality of our workplaces, or in many cases the lack of it. While Britain has some of the shiniest, most modern office buildings in the world, they do not represent the majority by any means. The average age of UK office buildings is around 53 years – built long before the days of the internet and electronic communications, in an era when fax machines, photocopiers and telexes were all the rage. And that is the average! Even in London, which has seen a huge wave of redevelopment in recent years, almost two-thirds of the office space is more than 33 years old.
These ageing buildings and their facilities have a direct impact on productivity. Earlier this year, we conducted a survey of more than 3,000 employees across a wide range of industries and employers. More than half of them admitted that issues with their workplaces made them unproductive. Chief amongst the issues are IT issues; I am sure that most of us have experienced a frustrating wait for someone from IT to turn up to fix the problem on your computer. Similarly, around a third of employees say that poor layout of their offices is a problem, especially when it comes to a lack of meeting space.
Overall, our survey showed that the average employee loses more than an hour a week due to these issues or three per cent of their working time. That may not sound much but if you multiply it across the whole economy, it adds up to a £71bn cost to the economy as a whole – more than three times the estimates of OBR’s latest downward revision. This shows how marginal gains in the way we work can add up to a great deal.
One of the other ways that productivity drains out of our economy is through staff turnover. Every time an employer loses a colleague, they suffer some level of cost and disruption as they must find a replacement and train them to fill the role. Here again, the workplace plays a vital role in talent retention. Our survey showed that better offices mean happier employees – of the people who said they liked their working environment, 89 per cent of them said they were happy in their job. By contrast only 23 per cent were happy with their job if they were not satisfied with their working environment.
I have to declare an interest. Mitie is one of Britain’s leaders in maintaining and transforming the working environment. But almost every employer can do something to improve their working space, and very often it does not need to cost much. It can be as little as ensuring you have the most modern and powerful Wi-Fi routers or optimising the office layout.
As the Return to Office wave continues across industries and even into the public sector, all employers have a fantastic opportunity to review their working environment. The experiences of the past five years give us the chance to rethink and optimise the places where we do business. Meanwhile our data shows that better workplaces are the foundation stone for better businesses and even for a healthier economy. It may not be the answer to the UK’s overall productivity issue but it would be a start.
Phil Bentley is group chief executive of Mitie
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