Uber’s London woes show the need for a taxi app owned by drivers
For the second time in a few years, Uber is under threat in London. Transport for London has judged the firm to not be “fit and proper”. It’s likely Uber will make a few minor tweaks to win back the licence. But if TfL wants a truly fit and proper ridehailing service in London, it should establish a driver-owned alternative to Uber.
Back in 2017, London’s transport regulator cancelled Uber’s licence, saying the company was compromising the safety of riders and not sharing data with the regulator. Uber promised to clean up its act. It added new rider safety features to the app, tightened the driver registration process, and promised to share more of its data with the regulator. The TfL license was reinstated.
Now, two years down the line, TfL has put the ride-hailing company on notice again. This time the regulator found that Uber’s driver registration system is relatively easy to deceive. That has meant customers have taken over 14,000 rides with unregistered drivers.
Uber is not facing problems only in London. Critics around the world have called out the company for undermining working conditions, clogging up city streets, destroying the traditional taxi industry, minimising the tax it pays, side-stepping national regulations and fostering a culture of toxic masculinity.
Uber has been banned in cities including Frankfurt, Barcelona and Budapest. Even in places where Uber continues to operate, its business model has been attacked by regulators.
In recent years, the European court of justice has ruled that Uber is not a tech firm but a “transportation services” company. This means Uber can no longer side-step the rules which apply to other taxi companies. Regulators in Europe and California have ruled that Uber drivers are employees not independent contractors. This means they are entitled to the basic rights of regular employees such as sick pay and holidays.
Uber is likely to appeal the decision to ban it from London. The company will probably promise to further tighten up its driver registration procedures and police drivers more closely. And considering Uber has become such an important part of the city’s transport infrastructure and is popular with customers, I suspect TfL will eventually reinstate its licence.
But there is a danger that this pattern of ban, improve and reinstate will be repeated every time Uber’s licence is up for renewal. If TfL really wanted to get serious about ensuring Londoners have access to “fit and proper” ridinghailing services, it could take the more ambitious step of helping to set up a driver-owned alternative to Uber.
This is not as strange as it might sound. When regulators in Austin, Texas decided to run Uber out of town, local drivers set up their own app called RideAustin. In 2017, the New Economics Foundation launched a project called CabFair which sought to create a driver-owned alternative to Uber in London. These alternatives should not come as a surprise. Co-operative structures are popular with drivers as not only do they make economic sense, they also give workers a greater say in how the systems which they rely on are run.
Beyond the taxi industry, there is mounting evidence that worker-ownership has many benefits for organisations and industries as a whole. Recent research by some of my colleagues at Cass Business School found that worker-ownership had benefits such as better levels of productivity, more resilient local economies and greater employee engagement. The evidence in economics tends to suggest that employee-owned organisations are an important way of smoothing out income inequality. Employee ownership can also have significant psychological benefits for employees too. A meta-analysis found that workers in employee-owned businesses tended to be more satisfied, more motivated, more supportive and more likely to act in a civil and pro-social way at work.
Worker-ownership may make employees happier, but does it make companies safer? After all, TfL’s main concern about Uber has been its passenger safety record. The jury is still out on whether worker-ownership makes companies safer. Some studies find worker-owned organisations are safer, while others find worker-ownership makes no difference to safety). However, there is good evidence that employees in worker-owned companies are much less likely to take dangerous risks. It makes sense. If you own the firm, then you don’t have someone else to blame for stupid decisions.
There are currently alternatives to Uber available in the London market. They may offer a slightly different service, but most still rely on the same venture capital-backed business model. To have proper choice, Londoners need ride-hailing apps which run on alternative business models – a driverowned app would not only give users the convenience they want, but also provide drivers with the fair working conditions they need. The big challenge that any driver-owned app is likely to face is getting the scale to a large number of customers and drivers. One way to do this would be for TfL to throw its expertise, resources and reach behind establishing a driverowned ride-hailing app in London. Now is the perfect time to start.
• André Spicer is professor of organisational behaviour at the Cass Business School at City, University of London. He is the author of the book Business Bullshit