A TIDE OF TAWDRY REVELATIONS
UBER bosses say we should all be ‘astounded’ that the company has been stripped of its licence to operate in London. But in many ways, the only astounding thing is that it took so long.
The rapacious Silicon Valley behemoth should not have been allowed to operate on the streets of the capital, where it arrived in 2012, without making significant changes.
Having repeatedly shown itself to be ‘not fit and proper’ – to quote Transport for London – in the way it ran its UK arm, it would have been brought down by Boris Johnson two years ago.
As Sadiq Khan’s predecessor as London Mayor, in 2015 Johnson made a series of proposals aimed at curtailing the firm’s wilder excesses and protecting the travelling public.
But they were abandoned, allowing Uber to continue flooding London with minicabs – creating historic levels of congestion and pollution and driving thousands of traditional black cabbies and rival minicabs out of business.
Johnson’s U-turn came about as a result of a murky political stitch-up uncovered by the Mail in March.
Our revelations provided a stark illustration of the extent to which the Californian giant was prepared to use lobbying to subvert democracy.
They laid bare a scandal at the very top of the Government – to the office of then prime minister David Cameron and his chancellor, George Osborne.
For we revealed how, over several months, the two men quite improperly lobbied fellow Tory Johnson to drop regulations that might upset Uber.
Significantly, their intervention came when Rachel Whetstone, one of their closest friends, was Uber’s £1million-ayear head of communications.
The Mail was able to reveal how senior aides at No10 bombarded the then mayor and his staff with angry messages and phone calls, while Cameron and Osborne are themselves believed to have sent him text messages.
It was hard not to conclude the then PM’s behaviour was influenced by close links to Miss Whetstone, who was godmother to his son and a key member of his ‘ chumocracy’.
JOHNSON’S proposals included limiting the number of minicab licences and making drivers take written English tests. The measures were announced in September 2015, but were then dropped suddenly in January last year.
Thanks to emails released under the Freedom of Information Act, we were able to show how they were killed off.
Cameron and Osborne, we revealed, had tasked senior Downing Street aide Daniel Korski with making sure that the firm was not seriously troubled.
Korski orchestrated secret meetings about Uber involving senior ministers, aides and staff from Johnson’s office, and sent a number of emails about the proposed changes to key figures in the mayor’s office. At least one meeting involved Johnson being hauled before key Cameron aides. An official note of proceedings recorded that ‘different views were exchanged’.
Korski also had ‘abrasive’ disputes with Isabel Dedring, Johnson’s deputy mayor in charge of transport and an Uber sceptic, who, say friends, was ‘quite taken aback by his aggression’.
The intimacy of the relationship between Uber and No10 was such that, in December 2015, at the height of the lobbying campaign, Whetstone got the PM and Chancellor to attend a Christmas party at a Mayfair restaurant.
Also on the guest list was Tim Allan, who runs the lobbying firm Portland Communications. At the time, Portland represented Uber. It was all very, very cosy. Incestuous, even.
A large portion of the Cameron government’s lobbying for Uber was laid bare in emails released by Transport for London this year following a Freedom of Information Act request.
The Information Commissioner is investigating why No10 had previously claimed in response to separate FoI requests asking for similar information that no such emails existed.
THE malign power of Cameron’s chumocracy was not the only way in which Uber was able to become such a swift business success. Above all, it offers a very cheap service.
But that’s because of a number of worrying factors.
First, its predatory pricing. One reason Uber offers such low fares – up to 40 per cent less than black cabs – is that venture capital investors let it sustain annual losses of $2billion, expecting this to help it grab a large market share by driving rivals out of business.
This policy could eventually create a monopoly for Uber of the like enjoyed in other areas by fellow Silicon Valley giants Facebook and Google.
Uber would then be able to ramp up fares, to the detriment of all travellers.
In the meantime, Uber drivers suffer. They take home around 70 per cent of each fare and are officially classed as independent contractors – meaning they work gruelling hours to break even, with no rights to a living wage, paid holidays, overtime or sick leave.
At night, many can be seen sleeping in their cars across London.
In October, this situation was the subject of an employment tribunal in which a group of drivers successfully argued they should be treated as staff. Uber is appealing against the ruling.
Incidentally, it is most ironic that an Uber spokesman yesterday claimed the loss of its licence in London would ‘put 40,000 drivers out of work’, considering that the firm’s bosses claimed at the employment tribunal that the drivers were not actually working for it.
Indeed, Uber lists only around 100 UK staff in its company accounts. Another reason its journeys are so cheap is some deeply unedifying tax arrangements.
Its affairs are organised via a legal but morally wonky ‘ double-Dutch’ structure, in which revenues from British customers go to a Dutch firm called Uber BV and then to the tax haven of Bermuda.
The firm also escapes VAT. As a result, it pays tax of around 1 per cent on income from UK passengers. The
impact of Uber hasn’t just been financial. Since it launched in London, the number of licensed minicabs has risen from 55,000 to 120,000, exacerbating pollution and congestion and leading to surges in illegal parking and accidents. Then there’s a flawed corporate culture, which has seen Uber embroiled in a string of ugly scandals that have raised questions about its morality. In January, for example, it paid £16million to America’s Federal Trade Commission to settle allegations that it lured people to become drivers with false claims of earnings. More awkwardly, there have been allegations of institutionalised sexism in the company.
Such scandals have led to European countries, including Denmark, Italy and Bulgaria preventing Uber operating.
Until recently, Uber avoided the same fate in the UK. But things have changed. Whetstone is no longer on its payroll and Cameron and Osborne have left Downing Street.
Osborne now edits the Evening Standard newspaper, and recently took a £650,000 job at the US investment firm BlackRock. Importantly, the firm reportedly invested £124million in Uber in 2014.
That stake was recently valued at around £500million, but today’s ruling means it’s now likely to be worth considerably less – and this time there’s nothing that Osborne can do about it.