Collaborative economy report response: June 2018

1. Key Recommendations in The Collaborative Economy

1.1. Shaping the collaborative economy that Scotland wants

The Panel identified a need for Scotland to work with new market entrants to develop businesses and platforms that create fair work and wider economic, social and environmental benefits. The Panel recommended that:

• Finance should be directed toward collaborative platforms that deliver fair work, social value and inclusive economic growth.
• Government and public sector incentivise procurement from inclusive forms of the collaborative economy.
• Investors from social finance sectors should be brought together to innovate and scale new socially responsible platforms in Scotland.

Scottish Government response

The Scottish Government supports the Panel’s view that the collaborative economy can bring significant benefits to consumers, competition and the economy; encourage more efficient use of currently under-used resources; and allow individuals to benefit from more flexible working arrangements and new ways of supplementing their incomes. We agree with the Panel’s assessment that Scotland should be proactive in shaping how the collaborative economy operates with a focus on platforms that deliver fair work and contribute to inclusive growth.

The Scottish Government’s economic goal is to see Scotland ranked in the first quartile of countries in the world on productivity, wellbeing, equality and sustainability. To help achieve this, the Scottish Government made a commitment that Scotland would be at the forefront of the digital economy. As part of this in 2013 we launched a “Business Excellence Partnership”, which to date has invested £8.7 million in promoting the digital maturity of Scotland’s businesses. This includes Digital Tourism Scotland which is a public and private sector partnership project running across Scotland to improve the digital skills and capabilities of tourism businesses.

In addition, £9.5 million has been made available through the Partnership to support a programme, managed by Skills Development Scotland, to tackle digital skills shortages across Scotland. This programme includes support to CodeClan, an industry-led digital skills academy which opened in Edinburgh in 2015. By December 2017, 200 CodeClan graduates had secured technology related jobs on completion of their courses. Scotland is also home to at least two incubators – CodeBase and TechCube – which help drive investment in tech start-ups; many of which could become part of the collaborative economy.

We have also taken action to start building the pool of collaborative platforms with the launch of ShareLab Scotland, a new Scottish collaborative platform fund. The fund will support organisations to develop and test collaborative digital platform models that will look to address challenges in sustainable energy and transport and deliver benefits to individuals and communities in Scotland. It will be delivered by Nesta, a social innovation charity, who have experience of delivering similar projects elsewhere in the UK. These include the LiftShare project, which is testing how a variety of community transport services can work together, and ShareSomewhere, which applies the peer to peer accommodation model to sharing underused community spaces. Nesta has also recently announced support to HomePointr in Falkirk, a social enterprise which aims to improve access to suitable housing options by connecting referral agencies with housing providers via an online platform.

The ShareLab Scotland fund was launched by the Scottish Government in June 2018 and will open to Expressions of Interest in July 2018 https://www.nesta.org.uk/project/sharelab-scotland. Grants of £15,000 – £33,000 are available to help early stage projects develop collaborative digital platforms that will benefit individuals and communities in Scotland. The Fund is being delivered by Nesta and, in addition to funding, organisations will receive mentorship and advice to develop and grow their idea. Nesta will also provide help to identify partners who may be willing to support a pilot and explore other funding opportunities. The learning from the fund will provide insights for future developments in this area.

Scotland is recognised as a model of good practice for social finance. Responsive forms of finance, which adapt to the needs of organisations, come from a network of social investment intermediaries (such as Social Investment Scotland); specialist and mainstream lenders, and enterprising grant-making foundations. We note the Panel’s recommendation about the potential role of social finance investors to support new socially responsible platforms and we will look for opportunities to further engage the sector in this area.

In relation to procurement, we are already working to identify “pathfinder” projects that drive innovation. Current examples of how procurement can support innovation include Non Domestic Energy Efficiency Frameworks and also Civ Tech®, where public organisations set civic challenges which smaller businesses are encouraged to tackle using innovative solutions. The Scottish Government’s aim is to deliver innovation in procurement which will address public sector challenges. We will continue to work with our partners and use the flexibilities in the public procurement rules to enable us to do this.

Transport Scotland's CivTech challenge was How can we utilise technology to improve on the detection and prevention of road defects? Road Intelligence's solution was to develop an app that collects road defect information of entire road networks simply by driving on it. Processing mass data through carefully built algorithms allows for very precise and accurate defect detection, heat maps and actionable intelligence. This avoids the need for time consuming and costly 'eyes on the road'.

Next steps

• We will use the learning from ShareLab Scotland, a new Scottish collaborative platform fund, to provide insights for future developments in this area.
• We will work with the social finance sector and other investors to consider how to support innovation and delivery at scale for socially responsible collaborative platforms.
• We will continue to use procurement to support and drive innovation which encompasses collaborative models.

1.2. Recognising good practice

The Panel highlighted the range of collaborative platforms and operating practices. Some demonstrate good practice while others fall well short of responsible business practice. The Panel noted the development of TrustSeal which has an industry led set of good practice principles, and recommended that the Scottish Government should take an active role in encouraging TrustSeal or an equivalent to focus on regulatory recognition, particularly with a view to providing clarity on local rules and regulations.

Scottish Government response

We note the Panel’s recommendation on including regulatory recognition as a principle of good practice. We commissioned Involve to organise two public engagement workshops on the collaborative economy. These took place in Glasgow and Edinburgh in October 2017 and the findings from the workshops were presented to the Panel. The workshops considered the measures that platforms operating in the collaborative economy can use to build trust and consumer confidence in their services. Overall, the display of Kitemarks or evidence of adhering to industry codes of practice had the highest level of confidence among workshop participants.

Sharing Economy UK presented to the panel on TrustSeal which they established in partnership with the Oxford University SAID business school. TrustSeal is a kitemark for the collaborative economy and has a set of good practice principles which provide minimum standards for sharing economy businesses. Through these principles, TrustSeal aims to convey a sense of trust and good standing in the market with both providers and consumers of services. The Association of Scotland’s Self Caterers ( ASSC) and the UK Short Term Accommodation Association ( STAA) have also developed and aligned their Codes of Conduct ( see section 3).

Next steps

• We will explore how to to use regulatory recognition in the work on collaborative platforms' rights and responsibilities ( see 1.4) and how this can be developed into a Kitemark or Code of Practice.

1.3. Mapping the collaborative economy in Scotland

The Panel highlighted that the collaborative economy is data rich and that advances have been made to guide public and policy choices and improve user experience. However, it noted a lack of up to date datasets to show the impact of the collaborative economy on Scotland’s economy and communities. The Panel recommended setting up an observatory to collect, aggregate, analyse and publish a variety of datasets that show the ongoing impact of collaborative economy platforms in Scotland.

Scottish Government response

The Scottish Government recognises the important role data plays in public policy making and delivering wider societal and economic benefits for all. Our Open Data Strategy set out our ambition for making data open and accessible to anyone. Good use of data can provide structure to decision making, reduce duplication, ensure open and fair markets, support precision (such as the dis-aggregation of statistics) where required, and save lives, money and time. For example, open data was used to ensure defibrillators in Trafford were positioned in areas where people are most at risk of heart attacks. Indicators including mortality rates, obesity levels, rates of cardiovascular disease, and levels of physical activity were used to decide where to place the defibrillators in the area.

The Panel made its recommendations particularly in light of the lack of the evidence base available in the short term rental sector, which encompasses peer to peer platforms, to inform and develop any regulatory or other action that might be necessary ( see section 3). We are continuing to engage with the Open Data Institute ( ODI) on its work in the peer to peer accommodation sector ^[1] and the wider collaborative economy. For example, this considered how platforms working with data about a local area could create economic opportunities and benefits for communities. ODI looked at peer-to-peer accommodation platforms working with data about physical activities but also highlight the range of other data that could be connected from local public services and community activities to shops and cinemas. We are also keen to explore whether there are any potential synergies with the data-driven innovation being undertaken in the Edinburgh and South-East Scotland City Region City Deal.

Next steps

• The Scottish Government has established a Delivery Group to take advantage of the opportunities and overcome the challenges presented by short term lets in Edinburgh and other parts of Scotland. The group will continue to engage with the Open Data Institute to develop a data observatory pilot on short term lets.
• We will explore ways to increase data availability in relation to the wider collaborative economy, such as local government, platform, infrastructure and other economic data, including the possible synergies with the data-driven innovation being undertaken in the Edinburgh and South-East Scotland City Region City Deal.

1.4. Consumer and provider understanding

The Panel highlighted the need for consumers and providers to be aware of their rights and responsibilities in the collaborative economy. The Panel recommended that:

• Government should provide resources to develop a secure place for people to access accurate information about their rights and responsibilities, including giving career advice to young people.
• Government should identify the dispute resolution available to consumers and any gaps in current provision.
• Platforms should provide information regarding employment status for those working in the collaborative economy.

Scottish Government response

The successful growth of the collaborative economy in Scotland needs to be built on trust: consumers need to trust that they will receive a quality service and have clear routes to redress when problems occur; workers in the sector need to trust that they will be afforded appropriate rights and protections; and providers must take greater responsibility for continuing to build this trust.

We support the Panel’s recommendation about the need to ensure that consumers and providers are aware of their rights and responsibilities. This is key to ensuring those engaging in the collaborative economy are informed and empowered, and providers can support this and are accountable when things go wrong. There is a role for government and platforms to ensure that information is accessible and unambiguous to consumers and providers. Citizens Advice Scotland ( CAS) highlighted in its submission to the Panel that there are a number of reasons why there may be particular consumer issues in the collaborative economy, especially in relation to safety, information and redress. Using its Consumer Helpline evidence, CAS highlighted problematic areas, including scams, redress, consumer protection and the employment status of workers. As the Panel highlighted, awareness and compliance of health and safety guidelines in peer to peer accommodation is of particular importance to ensure guests are protected ( see section 3).

However, to grow the collaborative economy in Scotland in line with our ambitions, we must go beyond simply raising awareness of the rights and responsibilities of participants and providers. The key to future growth in the collaborative economy is an active focus on building marketplace trust. We need to make it easier for consumers and workers to trust both the platform they are engaging with, and the people they are connecting with. Sharing Economy UK’s TrustSeal demonstrates how such an approach can build trust in collaborative platforms, providing security for people using their platforms and putting processes in place for when problems occur. As the use of collaborative platforms grows, we need to develop a deeper understanding of the market and use this intelligence to help improve trust, responsibility and accountability.

The growth of the collaborative economy has blurred the lines between providers and consumers. We need to ensure that consumer protections and redress routes keep pace with these developments, including where consumers interact directly with other consumers.

Next steps

• We will fund CAS this financial year to develop and deliver materials to raise awareness of rights and responsibilities for consumers, providers and those working in the sector, including a social media campaign.
• We will work with Trading Standards Scotland to understand the limitations of current consumer protection in the collaborative economy, particularly consumer-toconsumer transactions, and identify the potential actions needed to address these limitations.
• We will pilot new approaches to increase trust and transparency in the collaborative economy in Scotland, including: testing how users can easily access trust and quality ratings of collaborative platforms; the creation of a simple feedback system to allow users, providers and workers in the sector to engage more easily; and exploring how to gather intelligence in new ways, including from social media, to provide a fuller picture of how the market is operating.