Cameron, Osborne, their glamorous chum and the great Uber stitch-up
Revealed: The disturbing links between No.10 and the online taxi firm sweeping Britain – and, guess what . . . one of its major investors now has the ex-Chancellor on its payroll
T he run-up to Christmas 2015 was hectic for David Cameron and George Osborne. It involved a tense Commons vote on Syrian airstrikes, crucial pre-referendum negotiations with EU leaders and a state visit by the President of China.
Behind the scenes at Downing Street, however, something very different was providing them with food for thought; and it had nothing much to do with the usual dayto-day business of British government.
In late September that year, Boris Johnson, then the Mayor of London, had threatened to curtail the activities of modish Californian internet company Uber.
The firm runs a smartphone app that allows users to hail a minicab at the click of a button. It then sends a named nearby driver to their exact location using GPS (usually in minutes), calculates the cost of the subsequent journey using an algorithm so you have a good idea of what it will cost before you start and collects payment via the user’s credit card.
Uber tends to be between 30 and 40 per cent cheaper than traditional black cabs. But its drivers are relatively unqualified, and unlike their counterparts, have not acquired the ‘Knowledge’ of London’s streets, relying instead on satnav directions.
So although the firm achieved huge success after launching in our capital in 2012 (hundreds of thousands of users swiftly signed up, and by 2015 London had more Uber drivers than black cabbies), there were growing fears that its ultra-cheap fares were putting traditional taxis out of business.
Uber was also being blamed for an explosion in the number of minicabs on London’s streets from 55,000 to 89,000, which critics believed was increasing congestion, air pollution, illegal parking, and accidents.
What’s more, the conviction of Samson haile, an Uber driver from Brentford in West London, who was jailed for eight months for sexually assaulting a woman in his vehicle, had also crystallised public concern about the firm’s ability to keep passengers safe.
Police figures showed that rape or assault claims were being made against Uber’s London drivers at a rate of one every 11 days.
With these issues in mind, Johnson launched a Private hire Regulations Review which would consider new policies to curb the web giant’s aggressive business model.
They included limiting the total number of mini-cabs in the city, and requiring all drivers — many of Uber’s operators are foreignborn — to pass a written english test.
CRUCIALLY, the Mayor also wanted to force all private hire firms, including Uber, to wait at least five minutes between accepting a booking and picking up a customer.
That would render the internet company, which prided itself on fulfilling requests in an average of three minutes, significantly less attractive to customers.
Johnson said the move to regulate what he called the ‘ bumptious’ Uber was justified because, in his words, it had been breaking taxi licensing laws ‘in lots of minor ways’.
Clearly feeling threatened, Uber swiftly launched a petition, claiming that Johnson’s ‘ bureaucratic’ proposals would make it harder, and more expensive, to travel around the capital.
Then something very unusual happened. Within hours of the petition being announced, the Mayor and senior aides began to be bombarded with angry messages from Downing Street.
Some came straight from the top. George Osborne and David Cameron are believed to have sent forthright texts to the Mayor’s mobile phone.
Others came via special advisers and senior members of the No 10 policy unit, who began writing stern emails and making shouty telephone calls. Still more originated from the offices of Cabinet ministers, including Business Secretary Sajid Javid.
Strangely, all of these extremely powerful figures from the top of Britain’s Government were demanding exactly the same thing: that the Mayor drop each and every policy that might threaten the finances of Uber.
‘It was extraordinary,’ says a senior City hall source. ‘Boris was at the time quite chummy with Cameron and Osborne, and they’d occasionally text him about stuff. But on this, they were basically ordering him about.’
a second source close to Johnson adds: ‘In politics, you get used to people shouting and throwing their weight around, but this was something else.’
‘We had special advisers screaming at us, ministers and their aides issuing threats. It was particularly outrageous because transport in London is the Mayor’s responsibil- ity, and nothing to do with Downing Street or Westminster.’
Within days, I can reveal, the Deputy head of Cameron’s policy unit, Daniel Korski, had been assigned to ‘lead’ secret crisis talks between the Mayor and his senior staff, and a range of ministers and Downing Street figures.
Kowski orchestrated a series of meetings about Uber during October, November and December, according to emails and other documents released under the Freedom of Information act and obtained by the Mail this week.
at least one, on December 16, 2015, involved Johnson being hauled before Javid and top Cameron ally Oliver Letwin (Daniel Korski sat in). an official note of proceedings records, with notable understatement, that ‘different views were exchanged’.
‘I’ve never seen lobbying like it,’ adds the source. ‘Downing Street wanted to make absolutely sure that nothing was done to even vaguely upset Uber. and what’s more, the campaign worked.’
For in January 2016, the Mayor announced that he was dropping almost all the plans that Uber disliked, saying ‘we can’t turn our back on technological progress’.
The U-turn was hailed by the Californian web giant as a ‘victory for common sense’. But black cab drivers see things differently.
Steve McNamara, head of the Licensed Taxi Drivers’ association, which represents London’s 24,000 traditional cabbies said: ‘ The outcome of this so- called review was decided by Downing Street, who behaved like paid-up lobbyists for Uber.’
‘They leaned on Boris and Transport for London, and ended up getting exactly what they wanted. It’s a disgrace, a scandal.’
The U-turn also remains a huge
bone of contention with Johnson’s political rivals.
‘The regulation of private hire vehicles must be transparent,’ I was told by Caroline Pidgeon, the Lib Dem chair of the London Assembly’s transport committee.
‘Sadly all the evidence from these freedom of information disclosures suggests key decisions were, in fact, made on the basis of personal connections and behind- thescenes lobbying, carried out by key Downing Street staff.’
Today, as a direct result, there are roughly 120,000 mini-cabs on the streets of London, and Uber’s business model has been rolled out to 17 British cities, transporting customers on well over a billion journeys in the process. Traffic on main roads in the centre of the capital now moves at an average of just 7.8mph, one of the lowest recorded figures in a decade.
Uber is, for want of a better phrase, taking over the nation’s streets, with the Toyota Prius models favoured by its drivers now a ubiquitous sight.
The firm’s trick has been repeated across the world, too. For though its public image is increasingly tarnished ( for reasons we shall explore later), the Silicon Valley firm now boasts operations in every continent apart from Antarctica, and is thought to be worth an astonishing £56 billion.
Yet behind this fairy tale of modern capitalism lie a number of troubling questions.
Among them: why did David Cameron, George Osborne, and a host of their most senior aides and ministers decide, in late 2015, to lobby Boris Johnson so extraordinarily hard on behalf of Uber — a controversial U. S. company squeezing the incomes of highly-qualified black cab drivers?
The answer, if it lies anywhere, may very well be found at the heart of the ‘chum-ocracy’ that defined their Downing Street machine. Specifically, it would appear to revolve around a woman called Rachel Whetstone.
A 49-year-old PR executive, she worked with Cameron at Carlton, and also with him and Osborne at Conservative HQ in the Nineties. Subsequently, she became an adviser to former party leader Michael Howard. She is also the wife of Steve Hilton, the flip-flop-wearing Downing Street Director of Strategy during the early Cameron years in office.
BEING a personal friend of both Cameron and Osborne, she was also godmother of the former PM’s late son, Ivan. She and Hilton even bought a holiday home near the Camerons’ in the Cotswolds.
Why does this matter? Well, after leaving politics in 2005, Whetstone joined Google as its vice-president of global communications. During her stewardship, the tax-dodging web giant enjoyed what critics called ‘ revolving door’ access to Cameron’s Downing Street.
Then, in early 2015, it was announced that she was moving to — you guessed it! — Uber.
Her salary is believed to be gargantuan. Pretty soon, the company began to benefit, with top executives granted privileged access to senior government figures.
In 2015 and 2016, Osborne met them twice to discuss ‘ the UK economy’ and ‘ developments in technology’, according to government records.
Matthew Hancock, a business minister, had a separate meeting.
In his 2015 Budget, the then Chancellor declared that Government staff would be required to use car- sharing apps (of which Uber is the largest) to cut costs. Hancock declared that the ‘Government is getting behind new online businesses’.
Then, in December 2015, at the exact time Cameron and Osborne were secretly lobbying Johnson on behalf of Uber, the duo and their wives attended an intimate Christmas party thrown by Rachel Whetstone at Sexy Fish, an exclusive sushi restaurant in Mayfair.
Also on the guest list was Tim Allan, a former PR man who now runs the lobbying firm Portland Communications.
At the time, Portland had as one of its most high-profile clients a firm called — you guessed it! — Uber.
As ever, when politics meets serious money, there are further wheels within wheels.
Fast-forward to last month and, after Osborne had been booted out of the Treasury, he took a job at the U.S. investment firm BlackRock, with a salary of £650,000 for 48 days of work per year.
By rum coincidence, Blackrock invested a reported £124 million in Uber in 2014, giving it a stake which is now worth nearly £500 million. Undoubtedly, it is in its interests for Uber to succeed.
elsewhere, the architect of much of Downing Street’s Uber lobbying campaign, Daniel Kowski, was made a CBe in Cameron’s controversial resignation honours.
So why did Cameron and Osborne grant such extraordinary favours to the taxi firm?
Well, one way they may seek to justify them would be to argue that like any growing, entrepreneurial business, it helps to oil the wheels of the British economy.
That would be a fair point, were it not for the fact that, like so many rapacious internet firms, Uber pays almost no tax in the UK.
Instead, its finances are organised via a legal but morally wonky device known as a ‘double Dutch’ structure. This sees all revenues from fares paid by British customers routed to a firm in Holland called Uber BV.
Around 70 per cent is forwarded to individual Uber drivers. Almost all the remainder, totalling billions of pounds, ends up in the coffers of a related entity called Uber International CV, which has no employees and lists its HQ as the offices of a law firm in Bermuda.
The net result of this complex structure is Uber pays an effective tax rate of around 1 per cent on income from UK passengers. Its only official corporate presence in the UK revolves around two companies, Uber London and Uber Britannia. Based in swanky offices in Aldwych, central London, they employ around 100 people, and in the last year for which records are available paid a mere £400,000 in corporation tax.
So it goes that during an era of supposed austerity, Cameron and Osborne were advancing the agenda of a firm which goes out of its way to avoid paying its fair share to support the roads its business model depends upon.
At this point, some might also argue that Uber’s tens of thousands of self-employed drivers are contributing to the treasury via income tax.
But that’s by no means entirely true, either. Indeed, critics have argued that most earn such a paltry sum, they are reliant on tax credits and other benefits.
AT PRESENT, all are classified as self- employed. Depressingly, this made them targets of the failed tax grab in Chancellor Philip Hammond’s recent Budget which, while targeting modestly paid selfemployed people, did nothing to curtail tax-dodging by rapacious multinationals.
The circumstances of Uber drivers (many of whom earn so little that, according to a recent Bloomberg report, they are forced to sleep in their cars) was explored at an employment tribunal in London in October.
Nineteen British drivers successfully claimed they should be regarded as employees, rather than contractors, and paid the ‘national living wage’, sick pay, holiday pay and overtime.
The drivers said they earned as little as £5 an hour. Finding in their favour, the judges accused Uber of ‘ resorting . . . to fictions [ and] twisted language’ in court. Uber is appealing the decision. Meanwhile its tax affairs face a separate legal challenge from a campaigning group called The Good Law Project, which says it ought to charge 20 per cent VAT on fares — money that would go to the Treasury.
Uber dodges VAT by claiming it doesn’t actually provide taxable transportation services booked via its website. It says the ‘provider’ is the self-employed driver.
That’s not the only ugly litigation that the firm so beloved of our former PM and Chancellor is embroiled in.
In January, for example, Uber paid £16 million to America’s Federal Trade Commission to settle allegations it was luring people to become drivers with false claims about prospective earnings.
The case revolved around complaints that drivers would lease or buy new vehicles to drive while working for Uber, only to find that the company would then cut fares in a bid to cement its market dominance.
Many drivers have been forced deep into debt by such cuts, and believe Uber (which has never made a profit) is keeping fares artificially low in a bid to drive rivals out of business and so create a monopoly.
This issue sparked a PR disaster
last month when the firm’s chief executive Travis Kalanik (net worth around £5 billion) was filmed arguing with an Uber driver who’d complained the firm’s pricing policies were bankrupting him.
‘Some people don’t like to take responsibility for their own s**t. They blame everything in their life on somebody else. Good luck!’he told his less fortunate driver.
After the video became public, he emailed the firm’s staff, telling them: ‘To say that I’m ashamed is an extreme understatement . . . I must fundamentally change as a leader and grow up.’
Some would argue this admission was too long coming. Indeed, the corporate culture at Uber (which 40year-old bachelor Kalanik once joked should be renamed ‘Boober’ because it improved his romantic prospects) is widely regarded as toxic.
A month ago, for example, a former engineer at the firm called Susan Fowler went public with multiple claims of rampant sexism and harassment inside the firm.
They included the observation that on her first day in the job, her boss used the company messaging system to tell her he was in an open relationship and ‘looking for women to have sex with’.
Uber boss Kalanick said her experience was ‘abhorrent and goes against everything Uber stands for’. He launched an ‘urgent investigation’ into claims of harassment at his company.
And this week, there was a dramatic new development when Uber’s president, a respected corporate figure called Jeff Jones, quit, saying: ‘The beliefs and approach to leadership that have guided my career are inconsistent with what I saw and experienced at Uber.’
These, remember, are the ‘beliefs and approach’ of a firm which David Cameron and the most senior figures in his government chose to proactively support.
And it is a firm which continues to affect the lives of millions of Londoners who struggle through gridlocked traffic virtually 24 hours a day.
As for Mr Osborne, his new role as editor of the Evening Standard means he will have to make the journey from his West London home to the newspaper’s Kensington offices in the early morning rush hour.
So will he take the Tube to beat the jams — or just call an Uber?