Collaborative economy report response: June 2018

2. Supporting a Responsive and Agile Regulatory Environment for The Collaborative Economy

2.1. Regulation failing to keep up with innovation

The Panel highlighted the fluidity of digital industries and the challenge to ensure that regulation allows businesses to grow while protecting consumers, providers and users. It noted challenges with enforcing regulations, and the potential for public engagement to inform decisions on regulation.

The Panel recommended:

• On-going dialogue between industry, stakeholders and regulators, including learning other countries’ experiences.
• Assessing the medium and long term skills requirements of the regulatory sector to regulate a more algorithmically based economy.
• Trialling a ‘regulatory sand box’ approach to assess the impact and practicalities of regulation.

Scottish Government response

As recognised by the Panel, the Scottish Government has taken steps to create a regulatory environment focused on supporting economic growth. Our Better Regulation agenda applies to voluntary and statutory regulation and aims to reduce burden on business by implementing five principles: proportionate, consistent, accountable, transparent and targeted only where needed.

We welcome and agree with the Panel’s view on the opportunities which voluntary measures present. The Scottish Government’s approach supports that at the outset of any policy development, non-regulatory and voluntary options must be considered. A voluntary approach can often be more cost effective and secure greater collaboration in from industry.

The Association of Scotland's Self-Caterers ( ASSC) developed a new Code of Conduct in September 2017 aimed at improving standards in the industry and encouraging best practice. All ASSC members are obliged to meet the Code. In developing the Code, the ASSC worked collaboratively with the UK Short Term Accommodation Association ( STAA) whose own Code of Conduct contains a range of measures designed to boost consumer protection, support enforcement, maintain residential amenity and drive local business growth.

A voluntary system can be established more quickly than the development of primary or secondary legislation, and is therefore an ideal environment to test new standards.

A partnership approach is important to develop and deliver regulations with the support and assistance of the regulators and the regulated, to identify regulatory barriers to growth and solve these where we can. In line with this approach, following the initial discussions of the Scottish Government Short Term Lets Delivery Group with the City of Edinburgh Council, we will ask the Regulatory Review Group to facilitate discussions with key stakeholders. This action by Regulatory Review Group will deliver a scoped and prioritised set of proposals, wholly aligned with Scotland’s regulatory reform journey.

We consider there is potential in a regulatory sandbox approach proposed by the Panel. As highlighted by the Panel, the finance market has seen a progressive and sensible route to engaging with regulation and regulators using this approach. Such testing grounds can provide the opportunity to develop and test regulatory frameworks in response to new business models that enable companies to grow and innovate but continue to ensure consumer protection.

As identified in section 3, there is an opportunity to explore a sandbox approach to experiment with measures in relation to short term lets in Scottish cities, particularly in Edinburgh.

We agree with the Panel’s recommendation to maximise the value of digital collaborative platforms by engaging internationally. We recognise the value that this has already brought to work in this area. For example, ShareNL, the initiators of Amsterdam Sharing City and a key player in the Sharing Cities Alliance, presented evidence to the Panel. The Sharing Cities Alliance is currently made up of 13 cities from across the world where learning is shared between cities to help adapt and shape policy, overcome challenges. The Alliance started with New York City, Amsterdam, Seoul, Copenhagen and Toronto in May 2017. Other cities that have joined are: The Hague, Dallas, Washington D.C., Barcelona, Gothenburg, Malmö, Singapore and Tel Aviv. It provides a safe place to collaborate and exchange research and policies, and to jointly work on new legislation when dealing with issues from the rise of large platforms. Scotland has an opportunity to learn from global good practice, including around responses to the growth in short term accommodation.

Next steps

• To ensure Scotland remains recognised as one of the leading countries in Europe for better regulation, we will review lessons from other countries and use these to deliver the fair and socially responsible collaborative economy that we want for Scotland.
• The Scottish Government will continue to work closely with the Regulatory Review Group to actively improve the regulatory landscape and reduce unnecessary burdens on business.
• The Short Term Lets Delivery Group will work with the Regulatory Review Group to facilitate discussions with key stakeholders on any regulatory proposal relating to the management of short term lets including its consideration of whether a "sandbox approach" can be used to trial this in Edinburgh.