Collaborative economy: evidence analysis

Executive Summary

The collaborative economy connects individuals or communities via online platforms enabling the sharing or provision of goods and services, assets and resources without the need for ownership. The effect of the collaborative economy on how goods and services are provided and purchased has been significant, and has accelerated in recent years. The Scottish Expert Advisory Panel on the Collaborative Economy was established to provide advice, expertise and experience for policy development on the collaborative economy and to make recommendations on how Scotland can position itself to take advantage of the opportunities of the collaborative economy and overcome any regulatory, economic and social challenges.

This report presents an overview of findings from an analysis of responses to the call for evidence issued by the Panel in April 2017. The call for evidence received a total of 52 written submissions. Of these, 41 were submitted by group respondents (79 per cent of all respondents) and 11 by individual members of the public. Group respondents included a mix of businesses, business representative bodies, public sector and other organisations.

The call for evidence included seven questions focused on: opportunities, challenges and barriers for the collaborative economy in Scotland; legislative protections for those participating in the collaborative economy; the balance between regulation and allowing competition and innovation; and the role of government in relation to the collaborative economy. A summary of the main points raised for each question across all the main themes being considered by the Panel are provided below.

1. Opportunities for the collaborative economy

Respondents raised a range of points in relation to opportunities for the collaborative economy:

• The scale and speed of recent growth in the collaborative economy in Scotland, and estimates of likely future growth.
• The role of the collaborative economy in increasing choice and competition across business sectors. This included reference to the collaborative economy enabling more providers to come to market, to diversification of service providers for example to include more individuals, and to a growing range of products and services being made available to consumers.
• The potential for collaborative providers to drive innovation across business sectors, and encourage existing providers to adjust.
• The collaborative economy expanding the number and diversity of additional employment opportunities, including for individuals who may appreciate the flexibility of opportunities as collaborative providers.
• The potential for the collaborative economy to deliver social value and other benefits. This included enabling better use of assets such as vehicles and accommodation, enabling individuals to generate additional income, and reducing the environmental impact of transport use. Respondents also referred to the potential for sharing of resources to improve sustainability, and collaborative platforms providing a means for rural communities to engage with a broader range of services.
• Potential for the collaborative economy, and particularly peer-to-peer sharing, to enable consumers to access assets and services that they may otherwise be unable to.

2. Challenges for the collaborative economy

A number of potential challenges were raised by respondents in relation to the collaborative economy. Key points included:

• Questions around how regulation should apply to the collaborative economy, and the extent to which existing regulations are fit for purpose. See Balancing regulation with competition and innovation below.
• Concerns regarding perceived unfair competition between the collaborative economy and traditional providers, and the extent to which providers are operating on what they deem to be a level playing field.
• Concerns around workers' rights in the collaborative economy, and a need for greater clarity on employment status and associated rights.
• A mix of views on the potential for negative impacts associated with the growth of collaborative platforms and peer-to-peer sharing, particularly in relation to growth in short-term rentals and peer-to-peer accommodation. However, some suggested that these concerns were based on misconceptions.

3. Protection of contributors

In relation to protection of contributors (consumers, providers and businesses), the key points raised by respondents were:

• Comments around regulation of the collaborative economy, and the extent to which this ensures sufficient protections for contributors. This included some suggestions that existing regulations are fit for purpose, and a perceived lack of enforcement for collaborative platforms.
• Concerns around a perceived lack of protections for some providers of collaborative services. This was related to concerns regarding the employment status of providers, particularly for drivers of peer-to-peer transport services.
• Concerns around a lack of agreed guidelines, codes of practice or other protections across the collaborative economy. This was contrasted with the range of guidelines and schemes to ensure consumer protections for users of traditional providers.
• Specific concerns around consumer protections in relation to peer-to-peer sharing, related to concerns that new entrant providers using collaborative platforms may not be aware of the regulations with which they are expected to comply.

4. Balancing regulation with competition and innovation

Key themes raised by respondents in relation to balancing regulation of the collaborative economy with enabling competition and innovation included:

• A common view that existing regulations and legislation are adequate for the collaborative economy - in contrast with concerns noted earlier around the extent to which regulations are fit for purpose. Some suggested a need for regulation to differentiate between the pure sharing and other elements of the collaborative economy.
• Concerns regarding the extent to which regulations are being enforced across the collaborative economy. This included reference to a need for better information on providers using collaborative platforms, to support enforcement. Respondents made a range of specific suggestions to support regulation of the collaborative economy.
• Suggestions that discrepancies in regulation and taxation between collaborative and traditional providers had enabled what was seen as unfair competition.
• Specific concerns around regulation to better protect workers' rights across the collaborative economy.
• Concerns regarding the implementation of tax regulations across the collaborative economy, and suggestions that growth in the collaborative economy could lead to a loss of tax revenue. This was linked to a perceived disparity in tax burden for collaborative platforms and traditional businesses, and concerns regarding the extent to which tax revenues are collected from which peer-to-peer providers in full.

5. Barriers to growth of the collaborative economy

Respondents identified a number of potential barriers constraining growth of the collaborative economy:

• A lack of awareness and understanding of the collaborative economy was seen as limiting consumer engagement with the full range of collaborative providers, and with potential opportunities to provide goods and services. The specific need to raise awareness of pure sharing options was also highlighted.
• Concerns around potential for negative perceptions to undermine consumer confidence in the collaborative economy. Some suggested that consumer confidence could be influenced by misconceptions around potential negative impacts of the collaborative economy.
• The need for care in enforcement of regulations to ensure equality of protection and fair competition between collaborative and traditional providers, while avoiding negative impacts on the sustainability of collaborative services.
• Limited access to finance was cited by some as a barrier to growth. This included in relation to start-up funding to enable new providers to access the market, and the potential need for ongoing subsidy for models with a specific focus on delivering social value.
• Concerns around workers' rights and the lack of an employee voice were also highlighted as requiring action if the collaborative economy is to grow.

6. The role of government

A range of respondents referred to the role that government should play in relation to the collaborative economy. Specific points here included:

• A mix of views were evident in relation to the preferred level of government intervention in the collaborative economy. Some wished to see limited intervention to allow space for innovation and development of new business models. Others suggested that greater intervention is required to ensure fair competition, protection for consumers, and protection of taxation revenue.
• Several respondents suggested that government has an opportunity to learn from experience to date, and to provide a framework to create a robust and inclusive collaborative economy that can benefit all stakeholders.
• Respondent referred to a range of specific issues and potential actions where they saw a role for government. These were primarily focused around ensuring effective and proportionate regulation, ensuring collection of tax revenues, protecting consumers and workers, encouraging and supporting innovation, and enabling collaborative models that can deliver social value.