Documents considered by the Committee on 7 December 2016 Contents

10Digital Single Market: Collaborative Economy

Summary and Committee’s conclusions

Committee’s assessment

Politically important

Committee’s decision

Cleared from scrutiny; drawn to the attention of the Business, Energy and Industrial Strategy Committee

Document details

Commission Communication on A European agenda for a collaborative economy

Legal base


Business, Energy and Industrial Strategy

Document Number

(37829), 9911/16 + ADD 1, COM(16) 356

10.1The collaborative (also known as the ‘sharing’) economy enables people to share goods and services by using internet platforms and ICT applications. Its rapid growth in recent years has disrupted traditional business models, for instance in the transport and hotel sectors, generating debate over its regulatory implications (for example whether it undermines social protection of workers and consumer protection or stimulates competition, innovation and growth to the benefit of workers and consumers).

10.2In June 2016, as part of implementing its wider Digital Single Market Strategy and Single Market Strategy, the Commission published non-binding guidance for Member States on how to approach the regulation of collaborative online platforms and services. It addressed five areas: market access requirements; liability; when EU consumer protection law applies; the conditions under which an ‘employment relationship’ is considered to exist under EU law; and tax rules.

10.3The background to the Communication is covered in the Committee’s previous Report chapter, listed at the end of this chapter.

10.4The then Minister of State for Culture and the Digital Economy (Mr Edward Vaizey) said that the Government was generally supportive of the guidance, but was assessing its detail and would update the Committee on the Government’s position in due course.

10.5At its meeting on 21 July, the Committee noted that the UK has been a key proponent of the DSM from the outset and sought further information from the Government on the proposal, including the Brexit implications. The Minister for Energy and Intellectual Property (Baroness Neville-Rolfe) states that:

10.6We now clear this Communication from scrutiny and draw the Minister’s response to the attention of the Business, Energy and Industrial Strategy Committee, who may wish to probe the Government further in due course on how EU-wide guidance and enforcement of regulation governing the collaborative economy may affect different UK stakeholders, sectors and regions post-Brexit.

Full details of the documents

Commission Communication on A European agenda for a collaborative economy: (37829), 9911/16 + ADD 1, COM(16) 356.


10.7The detail of the Communication and preceding correspondence between the Government and the Committee is set out in the Committee’s previous report, listed at the end of this chapter.

The Minister’s letter of 13 September 2016

10.8The Minister’s responses to each of the questions raised by the Committee are set out in detail below, for ease of reference.

10.9On the extent to which the Government will review and amend domestic legislation in line with this ‘non-binding’ guidance, the Minister states:

“The Government currently has no plans to amend domestic legislation affecting the collaborative economy which is already in line with EU law. The UK assessed the legislative framework governing the collaborative economy in 2014 with the independent review of the sharing economy led by Debbie Wosskow. The Government accepted many of the recommendations of the report and changes to support the collaborative economy continue to be made, for example the extension of the tax break for people renting out their spare rooms from £4,250 to £7,500.

“Market access requirements: the UK already has a light-touch regulatory system and is committed to avoiding disproportionate and unnecessary burdens on businesses and other providers in the sharing economy. London rental rules were changed in February 2015 to facilitate home-sharing. Homeowners are only be able to rent out their property as a short-term let for up to 90 days a year to stop such lettings being done on a commercial or permanent basis.

“Liability: the Government wishes to ensure any ‘exemption from liability’ regime provides enough space for innovation to drive new and emerging services, as well as allowing stakeholders, including governments, the ability to prevent the dissemination of illegal content, including that associated with terrorism and online child sexual abuse material.

“The Government wants to strike the right balance between exempting collaborative platforms from liability and ensuring adequate consumer protection. So for example in the area of secondary ticketing the Government current puts a joint onus on platforms to ensure that the necessary information is made available to consumers.

“Government currently encourages service providers to be aware of the liabilities regime, and is also considering with stakeholders what further voluntary action can be taken to prevent access to illegal content.

“Consumer protection: the Government aims to take a balanced approach, ensuring consumer protection while avoiding over-burdensome requirements for collaborative economy providers. There is no specific consumer law protection designed for the collaborative economy as existing legislation applies where relevant, depending on the details of the case itself. Existing contract law will usually apply to customer to customer transactions, but in general consumer law does not apply to customer to customer contracts. We are keen to share best practice with Member States in this area.

“Employment: the Government is committed to boosting competitiveness and increasing labour market participation while ensuring fair working conditions. The Government believes that current rules accomplish these goals and do not need altering for the sharing economy. The Government is monitoring developments and undertaking research into the ‘gig economy’, which is related to the collaborative economy. Labour laws are a Member State competence. However the EU has developed minimum standards in social policy. The Commission has launched a consultation under the European pillar of social rights; the aim is to ensure fair working conditions and adequate social protection.”

“The Government wants to support the sharing economy and those making small amounts of income from occasional jobs, for example providing goods or services online such as renting a property on Airbnb or doing jobs through TaskRabbit.

“Tax: from April 2017 the Government will introduce two new income tax allowances of £1,000 each, one for trading and one for property. Individuals with trading income or property income below the level of the allowance will no longer need to declare or pay tax on that income. Those with relevant income above the level of the allowance can benefit by simply claiming the allowance instead of working out their exact expenses. The allowances will make the tax system simpler and easier to understand for over half a million taxpayers, either by taking them out of income tax or simplifying their expenses. The allowances are optional, and established traders and landlords can continue to use the established expenses rules.

10.10On whether the Government will continue to actively engage with the Commission and other Member States on the Commission’s strategy on developing a collaborative economy pending Brexit, the Minister recites the Government’s well-rehearsed position that until exit negotiations are concluded, “the UK remains a full member of the European Union and all the rights and obligations of EU membership remain in force. During this period the Government will continue to negotiate and apply EU legislation.” The Minister cites officials attending the Services Directive Expert Group on 12 July as an example of official engagement, and states that the “UK will also share best practice with other EU Member States in order to reduce unnecessary and disproportionate barriers to the collaborative economy and increase opportunities for UK businesses and consumers, including tourists”.

10.11On whether the Government considers cross-border coordination in the regulation of the collaborative economy a policy priority and would wish for this to continue regardless of the withdrawal of the UK from the EU, the Minister notes that “it is appropriate that collaborative economy regulation is decided at national or regional/local level, in line with EU law”, and that “UK businesses and consumers trading in the EU could be affected if guidance or enforcement has an impact”, which is “especially relevant for tourism, e.g. Airbnb”.

Previous Committee Reports

Ninth Report HC 71-vii (2016–17), chapter 2 (20 July 2016).

9 December 2016