Sharing Economy: trust and opportunity

28 April 2017

Sharing Economy UK chairman Richard Laughton explains how the group has joined with CBI to help businesses adopting the sharing model to build standards, trust and awareness of commercial opportunities

Q: What is Sharing Economy UK?

A: Sharing Economy UK (SE UK) was set up in 2015 to represent sharing economy businesses in the UK. It was established in response to a paper put together by my predecessor, Debbie Wosskow, who was commissioned by government to look at ways to make it easier for those types of businesses to flourish and contribute to sustainable and inclusive growth in the UK.

Sharing economy platforms enable individuals to transact, renting or selling things, such as empty houses or unused cars

One of the recommendations from government was to have a point of contact to speak for the industry. We have a range of members, big and small, which broadly fit together under the term sharing economy. Most sharing economy platforms enable individuals to interact and to transact with each other, typically renting things from each other, or selling things, making better use of resources such as empty houses or unused cars. It’s a waste having those sitting around and a loss of an economic opportunity for the people who own them.

There are many more businesses in the sharing economy than are currently members of SE UK - we’ve seen huge growth in the number of people taking part in this sector over the past five years. Hopefully, over time, we can come to be recognised as a useful way for them to interact with policymakers and opinion formers.

Q: Why has SE UK joined forces with the CBI?

A: The initial board of SE UK did an excellent job of gaining profile for the sector. There also happened to be a point in time when lots of people were talking about companies in the sector – the likes of Airbnb and, although they’re not members, and Uber. It became clear to the board that it would be sensible to work with an organisation that could help us keep that level of visibility and support us in talking to government. The proposition from CBI was compelling and we have signed a collaboration agreement. The intention is that there should be an ever closer union between the two, and that Sharing Economy UK will become a part of the CBI’s activities.

Q: What are SE UK’s wider goals?

A: Beyond the interaction with government and opinion formers, one goal is simply awareness - we want to make people aware that there is this way of interacting between individuals. Although there are high profile companies like Airbnb and etsy, most people have still not rented or purchased something from another private individual through a sharing economy platform.

The Trust Seal helps companies make sure that they’re adhering to high standards

One of the things that inevitably arises out of commerce between individuals is the question of trust. So a large piece of work for SE UK over the past couple of years has been trying to develop what we’ve called the Trust Seal. This helps companies make sure that they’re adhering to high standards, providing security for people using their platforms and putting processes in place for when things don’t go according to plan.

You don’t have to have a Trust Seal to be an SE UK member. So far, eight companies have been through the process of evaluation. We worked with Rachel Botsman at Oxford Saïd Business School to come up with some initial areas of review, and then with PricewaterhouseCoopers to implement those tests. We’ve been through a couple of iterations, so that we can ascertain whether or not companies are achieving the standards we’d like to see. We’ve had some contact from similar bodies elsewhere in the world who’ve been looking at the same problems and are keen to work with the processes that we’ve started to define within the Trust Seal. Another area of focus for us is research – understanding how and how many people are participating.

Q: Are companies like Deliveroo and Uber, which have stimulated debate about new business models, part of the sharing economy or the ‘gig’ economy?

A: It’s not straightforward - the terms are often used interchangeably and, in many ways, it’s as much about the way someone is using the platform as the platform itself. All sharing economy businesses are fundamentally about making better use of assets, whether physical or knowledge or time-based. A few characteristics of platforms and their users are helpful to consider although none is definitive.

It’s very difficult for gig platforms to provide training - but training people is a useful thing in the economy

First there’s the split between physical assets and labour of some description. Then there’s the question of whether or not suppliers on the platform get to set their own price or take the price decided by the platform. Finally it’s worth considering whether participants are using the platform as their primary source of income or if it’s providing a way of filling spare time or increasing use of an asset.

So someone making all their income accepting Uber requests is squarely in the gig economy. Someone renting their flat out on Airbnb when they’re away on holiday is definitely operating in the sharing economy. Someone who spends half their time using Deliveroo for work and the other half making things to sell on etsy is probably somewhere in the middle.

Q: How would you like to see the sharing model develop?

A: lot of members want clarity. The last thing you want to do is operate a business model you think is okay, and then find out you have a big tax bill later on because someone judges that it had in fact breached certain rules. Clarity around the statuses of employment, self-employment and worker could be very helpful.

We don’t want to have a system where people’s business models are being determined entirely by taxation law

There may be some opportunity to get rid of some of the unintended bad consequences of existing law. For instance, it’s very difficult for gig platforms to provide people with training - but I think we would all agree that training people is a useful thing in the economy.

In-work benefits like sick pay, holiday pay and parental leave are difficult to address. And what we don’t want to do is have a system where there’s a tax arbitrage choice or where people’s business models are being determined entirely by taxation law - that’s always subject to rapid change, so it’s not sensible.

Q: What are some of the ways the sharing economy is influencing the wider economy?

A: The sharing economy is changing the way that companies are selling. My day job is running easyCar and we now offer peer-to-peer car rental. If you look at carmakers many of them are getting involved in new ways of providing mobility beyond just selling cars. Something like 90 per cent of new cars these days are not bought outright but sold through some form of leasing or contract hire, so clearly manufacturers are embracing this approach to getting people active in the market. They’re also investing in car-sharing and peer-to-peer platforms to increase usage of their products without a traditional sale

The sharing economy offers an opportunity for more economic participation

It’s helping to make some economic activity more visible as well. Companies like Hassle provide a platform for people to access cleaners. The cleaning market has existed almost entirely in the black economy until recently, particularly home cleaning, and this is a nice way of bringing it out into the open, making sure that you’ve got better rates of pay for cleaners and better security for people using the service.

The sharing economy offers an opportunity for more economic participation - MyShowcase enables people to become stylists, selling their time and products locally. It’s a great example of how such platforms can enable people to participate in the economy, particularly those who are returning to the world of work after being absent for a while. Overall, the sharing economy is making it possible for many more people to get involved in commerce on a small scale.

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