Uber should fight the ban

Taxi's on The Mall © Getty images
Now who will challenge their monopoly?

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.

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.

  • Chris

    Yet another plonker with no grasp of transportation law. Uber are currently losing $4 billion dollars by subsidising prices globally, Uber would not be here without predatory pricing which happens to be illegal and yet no-one seems to care. Cheap fares for now but at what cost. Uber is doing what amazon do and it can’t last.

    • Robert

      40,000 Uber drivers in London, each earning on average £10,000 pa after costs? One cannot live in, or anywhere near London on that income. Do these drivers claim tax credits, housing subsidies and a host of other benefits amounting to say £15,000 pa?
      Thus, the government (taxpayer) subsidises the Uber business and its drivers in London to the tune of £600 million pa?

  • Chris

    London taxi apps including private hire apps like Gett, Mytaxi, Addison lee, Green Tomatoes they all pay VAT at 20% and taxes at around 25% Uber avoid paying VAT and in the six years trading in the UK Uber have paid a total of £480,00. The dirty work by columnist and government lobbyist will avoid the real questions and sell the public a false story. How much has Uber paid to government and newspapers to lobby on their behalf. Follow the money and you will inevitably find corruption

    • quark

      Cannot agree more with the above posts. Uber are yet another company driven by technology and making huge losses. The mantra nowadays seems to be, it’s OK to make huge losses and gobble up market share at the same time as destroying the competition in the process. Billionaire financial backers and venture capitalists are destroying our competitve market system by tolerating losses that cannot be sustained without the eventual destruction of all competition in their market place including small businesses. It is then they hope to recoup their losses and become monopoly suppliers charging what the market will just about bear. When the competition is wiped out, they will also become high cost operators. And probably base themselves in jurisdictions to avoid paying their fair share of Corporate taxes.

  • AAJ

    Mortals aside, Uber just need to comply with regulation and the appeal will grant them a licence again.

    • Chris

      Would they be the regulations as stipulated by past law or the lobbying arm of Uber paying millions of dollars to have the regulations changed or interpreted differently. Example: All private hire drivers must be pre booked in advance, (safety issue) you cannot pre book an Uber in the UK,

      • AAJ

        That has already been discussed and maybe already a court case. So, not that point does not need to be considered. Uber simply need to negotiate with TFL, just like any business would and they will get a perfectly agreeable outcome.

  • James Irvine

    From a purely economic perspective, Uber fails to pay for the externalities its business benefits from. There is not enough room on London roads for all these drivers, and people travelling around in vehicles on their own are massively polluting (note that even Priuses are not getting all their energy from renewable sources). There should be a per mile congestion and pollution charge applied to all non-public transport vehicles in city centres. Pretty soon it will become apparent that the economics don’t stack up if they have to pay their way fully (even ignoring arguments about tax avoidance and illegal financial subsidies)