Uber should fight the ban

Rather than cave in, Uber should stand up to Transport for London and fight the ban, says Matthew Lynn – even at the risk of losing.


Now who will challenge their monopoly?
(Image credit: 2011 Getty Images)

A few steps to placate the regulators.A grovelling apology. A sponsored stand at the next Labour Party event, and a generous donation to the mayor's next re-election campaign. No doubt the spin doctors and lobbyists for the taxi-app giant Uber are already coming up with lots of plans for reversing Transport for London's dramatic decision to ban its cars from the streets of the capital. That would be understandable. But it would also be a huge mistake. Uber should stand up to TfL and fight the ban, even at the risk of losing.

Ever since it launched in 2012 Uber has been unpopular with taxi and mini-cab operators in London, just as it has been a huge hit with customers. However, over the years, it has had a few problems with the standard of its drivers. There have also been complaints over how much drivers are paid. Last week, these issues culminated in the decision to strip Uber of its London private hire-operator licence. The firm has a couple of weeks to appeal, but if no compromise is reached then it will be banished from one of its most lucrative markets.

Of course, everyone would agree that taxis have to be safe. If Uber hasn't been diligent in vetting its staff then it should be made to tighten up its standards and face sanctions if it doesn't comply. But even so, it is hard to believe that TfL has not fallen for the backlash against Uber, and listened to the special pleading from cabbies and mini-cab firms. Uber is not just being punished for breaking a couple of rules it is being banned for providing too much competition to older, higher-cost operators and shaking up the business.

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Black cabs are a classic protected monopoly and, not very surprisingly, are expensive as a result. Uber has roughly halved the cost of travelling by taxi, and created 40,000 new jobs in the process. If you use the ride-sharing feature, which was never available in an old-style cab, it can be less than half the cost. True, some of those customers are people who would have got a cab before. But many of them are people who would have caught a bus, or not made the journey at all, because it was too expensive. It has massively expanded the "transport economy", which is what innovative companies do.

If the ban is ultimately implemented, there will be a lot of very unhappy people. Already, there is a tide of opposition to TfL's decision. When I checked on Tuesday, a petition to overturn the ban already had more than 780,000 signatures. In last year's election, Khan only got 1.1 million votes in the first round, and 1.3 million in the second. He can't afford to hack off 780,000 Londoners, especially as the average Uber user is likely to be a youngish, web-savvy professional, and therefore probably a Labour voter (unlike black-cab drivers). Without their votes, Khan can kiss his re-election goodbye.

Uber should bring in independent arbitrators to check that its drivers are properly vetted and that no one is being put at risk by taking one of its cabs. Then it should argue that the ban is a backward-looking, protectionist step, and campaign to have it overturned.If it compromises with TfL, it won't stop there. The mayor will be back for more. First he came for the Uber drivers. Then it will be Just Eat drivers, then online estate agents, challenger banks, and any other tech company that threatens to disrupt existing businesses. Before long London will become as bad as Paris, where, to take just one example, Amazon was stopped from offering two-hour deliveries on the grounds that it might make life difficult for existing retailers. And its economy will end up about as lively as Paris's as well.

Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.