London and Uber? It’s Complicated

A cab in central London. Toby Melville/Reuters
A cab in central London. Toby Melville/Reuters

When Sadiq Khan, the Labour mayor of London, stands in front of the annual gathering of his party’s activists next week, he can be confident that his speech will have at least one applause line: He is the politician who took on Uber.

On Friday morning, Transport for London, the not-for-profit company that runs and regulates transport in the capital, made the surprise announcement that Uber, the company that likes to call itself a “ridesharing app,” would not have its license to operate in London renewed on Sept. 30.

Mr. Khan immediately released a statement supporting the decision, saying that all London businesses needed to “play by the rules.” It’s a sentiment that will be echoed by the Labour Party’s leader, Jeremy Corbyn, a left-wing populist who has often criticized big business.

Last year, when the Labour leader claimed he had to sit on the floor of a “ram-packed” train, and used the opportunity to call for the renationalization of Britain’s railways, it led to an almighty row between Mr. Corbyn and Virgin trains, which operates the service and released CCTV images showing Mr. Corbyn bypassing vacant seats — but that row only burnished Mr. Corbyn’s anti-establishment credentials. Sticking it to a Silicon Valley start-up will play equally well with Labour’s activist base.

Mr. Khan, meanwhile, will find this infusion of political capital particularly useful; he backed an unsuccessful challenge to Mr. Corbyn’s leadership last summer. Until earlier this week, he had not been given a slot to speak to the party’s annual conference in Brighton, but now he will have an opportunity to make the case that Labour is prepared to confront the titans of the so-called “gig economy.” That will be music to the ears of the trade unions, which provide the party with the bulk of its funding.

Even so, this move is not without risk for the London mayor. Around 40,000 drivers work for Uber (though the company has always rejected suggestions that they are its employees). In a sad irony, that contract-worker status also means drivers will not be entitled to severance pay if Uber ceased to operate in London. Some would undoubtedly find work with other minicab companies, while others might struggle to pay their bills, particularly if they have borrowed money to buy or lease their cars. The mayor needs to find a way to seem sympathetic to their plight while confronting the mighty Uber.

Of course, this skirmish could still end peacefully rather than leading to all-out war. Uber is allowed to operate in London until its appeal is heard, so, in some ways, the announcement feels like a muscular negotiating tactic from the regulator, aimed at bringing the ride-hailing company to heel.

The Transport for London statement said that Uber was not a “fit and proper” company, citing its lax approach to background checks and reporting criminal offenses, as well as its approach to explaining the use of Greyball software, which could be used to block the regulator from monitoring its services. It is possible that Uber could address these issues within weeks and have its license renewed.

And there are bigger undercurrents to the confrontation. The number of traditional cabs — whose drivers learn “the Knowledge,” meaning they don’t rely on satellite navigation — has been falling for five years and is now 24,618. (For comparison, there are estimated to be 117,857 private hire drivers in London.) But cabbies are still a big enough bloc to lobby effectively for their livelihood to be protected.

Earlier this year, Transport for London ended up in court over its plan to make all licensed drivers pass a written — not just spoken — English test. Since the majority of cabbies are white and British, while the majority of drivers for Uber and other private companies are not, the test felt to many like stealth protectionism. Fans of Uber also argue that black cabs have been slow to adapt to new technology. For example, credit card payment machines were only introduced as standard last October. Without pressure from competitors, that small innovation might have happened even more slowly.

Many middle-class Londoners — the kind who buy organic food and voted to stay in the European Union — feel conflicted about the cabs vs. Uber war. They complain that the traditional cabs are uncomfortable, expensive and belch diesel fumes into a city with air quality problems. Cabbies also have a reputation for being grumpy and unhelpful — something that Uber drivers, who are given a star rating by every customer, cannot afford to be.

But those same Londoners are also quietly impressed by the way Transport for London runs the capital’s transport network — you can tell, because they don’t constantly grumble about it. (Actually praising it would be very un-London.) The contrast with privatized rail companies only makes commuters feel more goodwill towards the organization.

How the London vs. Uber saga plays out will be an important test of Britain’s mood — and will give clues to its future political direction. There is a feeling in the air that regulators should stand up to businesses that simply ignore any rules they don’t like. Even among Conservatives, free market fundamentalism is out of fashion. Britons are no longer so in love with “disruption” that we are prepared to overlook the consequences to job security and quality of life it can entail. Perhaps voters have decided that the slogan that galvanized the Brexit vote — “Take back control!” — equally applies to imposing rules on unfettered capitalism.

Helen Lewis is deputy editor of the New Statesman.

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