What does TFL revoking Uber’s Licence mean for the Capitals Private Hire Industry (and what is actually going on?)

The biggest news to come out of TFL this year was the announcement that Uber, that’s right Uber, would be having their licence revoked on the 30th of September, although they are still permitted to operate during the appeal process that is currently underway. The ban comes after a number of ‘mistakes’ the monolithic taxi company has admitted to, predominantly, its failure to report criminal activity, and provide adequate background checks on drivers[1].  According to recent YouGov polls, 43% of Londoners agree with the ban[2], which could affect 40,000 drivers, and a user base of around 3.5 million people. But what are the results of the actions taken by Sadiq Khan and TFL going to be, and could the latest Uber fiasco be simply diverting attention away from something else that could potentially change the London Private Hire industry as we know it?

Possible outcome No 1: The Shift in Power Now, while Uber maybe the first name on the list when people think of ordering a cab, they certainly aren’t the only operator out there. Addison Lee is the most obvious competition to Uber, but other apps such as GET (the taxi based Uber equivalent) could take rise and swing the shift of power back towards the historic Hackney Cab. Now, while fare prices may average an increase (which is why Uber became so popular), people would benefit from the safety and security that has always be paramount to the black cab industry. A reduction in traffic on London streets would also serve as a welcome benefit to pretty much everyone; from pedestrians to cyclists I think we can all agree that London could do with better congestion control. Not only this, but surely it would lead to an increase in prosperity for small Private Hire owners, who have found themselves increasing marginalised in the last few years due to the financial clout that Uber has, namely, being able to run a huge deficit to undercut the competition and increase its stronghold on any given area. However, I have a strong suspicion that outcome no.1 is not that realistic, and due to another decision made by TFL in recent months, leads me to believe outcome no.2 is far more likely.

Possible outcome No 2: Uber Returns, while new licencing fee’s lay waste to smaller Private Hire companies further reducing its competition and increasing its influence.

What I am sure most of you within the Private Hire industry are aware of, but many of you residing outside of it aren’t, TFL’s recent decision to alter its current licensing fees is something which will affect every PH owner in the city. Planned increases to licencing fees may not be anything new, but the scale and margin of increase proposed is certainly a cause for concern.

Below you can see TFL’s planned changes, now while there is only a marginal increase for the one-man bands, and actually a decrease of around 30% for the small 8-10 car companies, the % increase for anyone operating with over 20 cars and especially when you hit the 100-car margin, starts to make you questions TFL’s motives.

With as 21 car fleet now being expected to pay a £22,000, (that’s an increase of 679% by the way), and anyone with over 100 cars looking at a bill of £166,500, yes that’s right £166,500 (only a cheeky additional 5792%) the conclusions we can draw is either TFL are purposefully trying to remove large swaths of private hire cars from the city, or the more likely reason, using their position of power to extort vast sums of money from the industry.

[3] Now for large company’s like Addison Lee, they are going to feel the pinch for sure, but their fee increases are not insurmountable given the sheer size of the company, it is the medium to smaller car companies that are now potentially being left in a debilitating position. In an industry were margins are everything, and income boils down to essentially low cost/high volume sales, it’s safe to assume that the result of these actions means we are going to see a vast reduction in alternative private hire transport, with the possibility of many operators seriously struggling under the new financial regulations[5].

But this leads to an interesting question… what about Uber? Yes, they are currently fighting to hold onto their licences; yes, there would need to be some regulatory changes implemented before they could return, but is TFL, who seems adamant on pursuing this almost ‘smash and grab’ tactic really going to turn down a £3 million pay packet. In this writer’s opinion… NO is the answer. Of course they’re not. At the end of the day, government institution or not, they are a business, and as a business their main priority is profit. What this could mean (and the likely outcome I am afraid) is the return of Uber, a business modelled on undervaluing its services to remove competition, illegally using its technology to avoid financial penalty[4], and failing to report criminal activity, remaining on the streets of London, but now with the added benefit of the government itself helping to remove its competition.

Conclusion: A Bleak future, but with a slither of hope

Now while some may take this article with a pinch of salt, and I agree you should (I’m not exactly looking into a crystal ball here) the evidence does suggest a rather bleak future for the private hire industry. But not wanting to be classified an entirely morbid cynic I will end with a small ray of hope, something anyone with a view point on Uber and TFL can join in and voice their opinion on, and potentially help shape the future of Private Hire in London. As I noted earlier, these changes are not set in stone, Uber is not definitively coming back, and licencing fee changes are yet to have I’s dotted and the T’s crossed. Organisations such as the LPHCA, who are the union representative for the operators side of private hire are holding a debate on the 9th of November to hash out a strategy to block these incoming regulations.  Not only this but anyone is free to contact TFL to voice their complaints over the proposed changes, and government petitions are free to all to be created, and if signed by enough people, debated with the House of Commons. What I am saying is, there are options. If you, like me do not want to see outcome 2 become a reality, do not want to see the monolithic giant continue to spread its bad business practices over London and want to stop smaller business being stifled by the government in their attempt to challenge the de facto ruler of Private Hire, your chance is now. The more people who stand up and are counted, the more chance we have of creating an outcome we can all be happy with.

Unless you like Uber, then you can go to hell 😉

Disclaimer: The opinions represented here are the personal opinions of the individual writing them, and do not necessarily reflect the views and opinions of Magenta Technology.

Nick Burt | Magenta Technology | nick.burt@magenta-technology.com