The UK has launched a very imaginative scheme to help Ukrainian refugees to find sanctuary in the UK. The “Homes for Ukraine” programme offers compensation to UK homeowners who take a refugee into their home for at least 6 months. It is a clever idea, with features that run parallel to the so-called “gig economy,” in that it makes greater use of existing resources instead of putting in the time and investment it would take to provide new ones.
Unlike many previous refugees, the new ones will not be housed in temporary camps, created or converted for the purpose, nor will they be assigned temporary space in hostel or hotel accommodation. Instead they will move into underused private space that is already in existence. Furthermore, they will have the support of those who provide space for them, and will not need extra staff to be trained and employed to help them.
This is an example of what the City calls “sweating assets.” It’s a phrase used to describe extracting more value from an asset beyond its original intended use. It means extracting more value from resources already in place, rather than creating new ones. In this case the assets sweated are the spare space in the host’s accommodation, and a little of their spare time to help their new guest settle into the country that has welcomed them.
“Sweating assets” has received much attention in the 21st-century, but its roots go back earlier. In 1972 a McDonald’s franchisee put it to Chairman Ray Croc that they had buildings and staff and were incurring operating costs all day, whereas their overwhelming use came twice a day at lunch and dinner. McDonald’s breakfast was born, and was soon followed by the celebrated Egg McMuffin, designed for the purpose, along with other morning goodies. In 1977, the company introduced a full breakfast menu that included pancakes, sausage, hash browns, and more. Within 20 years, McDonald's was making $5 billion a year on breakfast alone. They had found how to sweat their assets to good effect.
In 2008 three San Francisco entrepreneurs found a way to use the extra space in people’s homes by constructing a site that would allow visitors to rent it, usually on a short-term basis, especially for holiday visits. Airbnb was born, and people were able to afford far less costly accommodation than that proved by hotels. That spare domestic space asset was sweated.
In a similar story, 2009 saw the birth of another idea, that the unused assets of private cars and the spare time of drivers could be sweated to provide a telephone ride-hire service that used modern technology to link would-be riders with willing drivers. Uber was born, and the face of urban transport changed. People were able to secure a ride, even when there were no taxis around, and they could secure it at a lower cost.
Less dramatically, other assets have been sweated, including the drive-ways of private homes rented out as parking spaces during times when it was not being used by the owner’s vehicle.
Sweating assets has environmentally-friendly elements, because it makes the development and use of new assets less necessary. It just makes more use of the current ones. It depletes fewer resources. It is, of course, disruptive. Most innovative ideas are, as the old vested interests have to give ground to the new opportunities.
The new “Homes for Ukraine” programme will not be disruptive, however; it was the war that did that. Instead the new programme will be constructive, sweating the asset of spare domestic space to give our new guests the best chance of a better life because of it.