CHANCELLOR: DON'T IGNORE THE SHARING ECONOMY - IT COULD SAVE YOUR BUDGET
AN OPEN LETTER
Dear Mr Hammond,
I know you have a lot on your plate this week. I’m sure you’ve been having sleepless nights, Brexit nightmares, and no doubt you’re checking the small print on your pension. But I’d ask you to read this first. It could well save your job.
I suspect your budget tomorrow will overlook the current best hope for the British economy: the Sharing Economy.
In cities, towns, businesses, communities and countries across the world, the Sharing Economy continues its disruptive march, delivering the biggest societal shift since the Industrial Revolution.
Valued at over £190 billion globally - but predicted to rise to over £2 trillion in the next few years - what was initially considered a passing trend is now going to be counted as part of GDP by your own Office for National Statistics.
From how we work, where we live and what we eat, to our health, wealth and social bonds, the Sharing Economy is proving to be a game-changer.
Now we’ve reached peak ownership, we are choosing to own less and “live” more. And given that 65% of adults in the UK are participating in the Sharing Economy it’s clear, to me at least, that it could be the saviour of our economy.
I know you’re concerned about jobs. Consider this: within the next 5 years, half of the UK’s working population will be freelance. The so-called gig economy - a phrase unjustly tarnished by Uber’s troubles - is appealing to a generation who are choosing to access the type of work they want, when they want it. Smartphones have untethered workers from the shackles of their desks; social media connects people across boundaries and new online Sharing Economy sites are opening up access to the labour market for those who’ve previously been pushed out.
The Sharing Economy has also started to conquer housing. By 2021, 1 in 4 homes is expected to be rented - shared housing is fast becoming the norm. Millennials are choosing ‘co-living’ models where they cannot only access shared resources, facilities and co-working, but can be part of a community.
But this trend isn’t just restricted to the young. Recent studies show that the number of people living in flatshares between the ages of 55 and 64 has risen by a whopping 343 per cent. And home-sharing platforms such as Airbnb have helped unleash a generation of micro-entrepreneurs who are making a significant contribution to the economy.
A Sharing Economy is also a much more productive and efficient economy, removing the slack from the system by viewing ‘waste’ as simply resource in the wrong place. For example, social enterprises such as Fareshare divert perfectly good food from landfill to people living in food poverty. Last year they delivered 28 million meals in the UK to people who needed feeding the most, whilst making an important contribution to the economy through their win-win business model. These ‘win-win’ models are at the cornerstone of the Sharing Economy, bringing economic opportunities whilst creating social and environmental value.
So here’s what you should do about it.
Firstly, for individuals. Your government recognised the importance of this sector in the 2016 budget by introducing the world’s first SE tax allowance - but now it needs to go further. Increase the limit to £4,000 each and expand it to include car sharing, bike sharing and food sharing. This will mainstream the sector by enabling micro-entrepreneurs to trade shared services, goods and assets online, boosting personal productivity and economic activity.
Secondly, for businesses.
To incentivise SMEs, start-ups and businesses looking to move to the UK: introduce a grace period of 2 years for certain admin requirements including VAT and tax returns. This will encourage and simplify the process whilst providing an incentive to trade here during uncertain Brexit times. And why not also give these businesses 2 years VAT-free? For larger corporations, introduce a tax break on using assets that are usually idle. Depreciated assets - when put back into the system - get VAT back.
Finally, let’s make the UK a global leader in the Sharing Economy. We need a showcase directory of the best British SE companies, prioritised for trade missions and exporting.
The Sharing Economy was born out of the 2008 recession and a need to do more with less. Now 28% of the global adult population are participating with figures predicted to double within the next year.
The UK’s Sharing Economy is the fastest growing in Europe; we have the opportunity to position ourselves as the global leader of this new economy, creating monetary, social and environmental wealth for the whole nation.
I do hope your red briefcase recognises the need to share - it’s a phenomenon you cannot afford to ignore.