When I lived in London in the 1990s, I had to use pricey Black Cabs to get around the city at night. However, heaven help you if you wanted to go South of the Thames (as I did when I lived there) after midnight – Black Cabs would just refuse to take you. On one occasion I watched in horror as the cab driver got out and literally started a fight with a driver who had cut him off – and he kept the meter running throughout the fracas.
London’s days of high prices, uncertainty, and danger ended when Uber started operating there in 2012. It went on to dominate the London private hire car market. Today, that was all thrown out as Transport for London (TfL), an Uber competitor in that it runs the Tube and franchises bus services, revoked Uber’s license to operate.
The decision was ostensibly based on health and safety grounds. TfL said:
"TfL considers that Uber's approach and conduct demonstrate a lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications. These include:
- Its approach to reporting serious criminal offences.
- Its approach to how medical certificates are obtained.
- Its approach to how Enhanced Disclosure and Barring Service (DBS) checks are obtained.
- Its approach to explaining the use of Greyball in London - software that could be used to block regulatory bodies from gaining full access to the app and prevent officials from undertaking regulatory or law enforcement duties."
These grounds are puzzling. Uber has a dedicated team responsible for working with the police regarding incidents with cars that use the Uber app – something London’s Black Cabs lack. Uber’s drivers go through exactly the same background checks and approval processes that Black Cab drivers do. And Uber denies that the Greyball feature has ever been used in London.
Moreover, accusations of violence, especially sexual violence, by Uber app drivers are overblown. As Reuters reports, “Of the 154 allegations of rape or sexual assault made to police in London between February 2015 and February 2016 in which the suspect was a taxi driver, 32 concerned Uber, according to the capital's police force.” If Uber was uniquely bad in having drivers who attempted sexual assaults, that share should be much higher.
TfL should remember that the unlicensed minicab industry, which existed because of the limitations of Black Cab service and which Uber crowded out, was a source of far more assaults. According to a Metropolitan Police report that analyzed data from 2010, before Uber started up, there were at least 250 and possibly as many as 1,125 cases of sexual assault by unlicensed minicab drivers a year.
Uber solved that problem through its combination of background checks, driver monitoring, low fares, and trust feedback – passengers can see how other passengers rated the driver. TfL may have just reinstated it.
That is why women, in particular, have started to object to the decision. One of Uber’s main attractions is that it prevents women from having to stand on street corners at night, perhaps after drinking, and finding themselves unable to hail a cab that will take them where they want to go. Rachel Cunliffe of CityAM notes at The Spectator:
"[N]ighttime transport in London still leaves a lot to be desired, and the knowledge that you can book a door-to-door service without breaking the bank is intensely reassuring. Factor in the ability to track your route and send details of your trip to friends so they know exactly where you are, plus the stark reviewing system that discourages unacceptable conduct, and Uber feels significantly safer than most of the alternatives."
If Uber is unable to make points like these stick on appeal, then up to 40,000 drivers face having to find alternative sources of income. The effect of Uber as a free-market welfare safety net will end.
There’s No Going Back
While it may at first seem odd that the socialist Mayor of London, Sadiq Khan, agrees with the decision that could put so many people out of work, the decision becomes less puzzling when the opposition of various labor unions to Uber is taken into account. The opposition of labor unions to the sharing economy is a key point made by sharing economy expert Jared Meyer in his book, “How Progressive Cities Fight Innovation.”
However, the ridesharing genie may be out of the bottle. When Austin, TX, imposed controls on ridesharing apps that Uber and Lyft felt were too stringent for them, a number of innovative alternatives sprang up. A nonprofit ridesharing coop like RideAustin would be an interesting problem for TfL, Khan, and the labor unions to face.
One final factor needs to be considered. Many international travelers to London use Uber around the world. If they are faced with twice the prices, cabs whose credit card machines are mysteriously “not working” after they get in, and a restricted range of options for travel around the city, the attraction of London as an international business destination will diminish.
In London’s foolish Uber decision we may have a glimpse of what might happen if Brexit goes wrong.
Originally published to the Foundation for Economic Education.