CEO & Founder, Kabbee
727-729 High Road
Monday 2nd October 2017
Mayor of London
Transport for London
11th Floor, Zone R4
197 Blackfriars Road
To The Mayor of London, Sadiq Khan,
I am writing this open letter to you in relation to Transport for London’s recent decision not to renew the license of Uber London, and the subsequent, surprising comments made by Prime Minister Theresa May on September 28th, which support an extension of the license.
As the Founder & CEO of Kabbee, London’s largest minicab aggregator, where we work with 50 of London’s best licensed fleets, and in my position as the Founder & CEO of iRide London, the largest minicab fleet in the North West of the City, I feel reasonably placed to provide insight on the impact of these decisions for London.
Theresa May’s comments addressed just one element of the Uber debate – the job losses of 40,000 drivers. These job losses, and the potential, quite fearful, inability of Londoners to travel, will not be a natural consequence of Uber losing its license. I’m keen to provide some assurance to the 40,000 drivers as well as Uber’s recently referenced 3.5m passengers.
There are three major, but fixable, issues with regards to Uber’s license, which are:
1) Unfit and improper behavior: Uber has failed to meet this reasonable standard in a number of serious areas – one being the safety and security of its passengers, the other, the use of its Greyball technology, which, to put it simply, is designed with the sole purpose of confusing and avoiding regulators.
2) Uber charges its drivers 25 percent commission on each fare – which is slightly higher than many London cab fleets. It is often quoted in the press that Uber takes payment for these journeys not in London, but via their Dutch-based sister company. It has also been referenced that Uber does not pay VAT. If this is the case, then the UK taxpayer has been subsidising 5% of the value of Uber rides – which is a contentious and unfair advantage to UK based licensed operators, who will not be on the level playing field that the Prime Minister has requested.
3) It has been widely referenced in the press that Uber has provided subsidies on its fares in order to acquire significant market share. It has also been reported that these investments have come at a significant financial cost. The natural outcome of sustained behaviour like this is a monopoly. This is not the consumer choice championed by the Prime Minister, and the danger of allowing a private company to reach a monopolistic position is of course very dangerous when considering that transport monopolies essentially become utilities.
The solutions to the above issues are simple:
a) If Uber London can prove that they will operate in a fit and proper way, including the clarification requested around Greyball, its license should be renewed, and Londoners can continue to use Uber. This would reflect the desired outcome of the government.
b) Uber London must clear up ongoing concerns around any failure to pay HMRC the same levels of VAT and corporation tax paid by other UK-based minicab fleets. I am guessing this would reflect the desired outcome of the government.
c) There should be a cap on the overall percentage of the minicab driver supply that can be overseen by an individual company – this will ensure healthy competition and consumer choice forever. I am guessing this would also reflect the desired outcome of the government too.
With regards to the genuine financial concerns of the 40,000 Uber drivers, should Uber’s license not be reissued, then assuming the quality of these drivers was equal to the standards required of the existing fleets, I would expect them all to quickly secure ongoing work.
Finally, to reassure passengers, before Uber joined the market, London’s minicab fleets and aggregators like Kabbee were investing in technology to speed up the app-based booking, tracking and payment process for minicabs – the progress has been phenomenal, but has been overshadowed by Uber’s arrival which, as we continue to see, was based on a strategy of not playing by the rules.
In the midst of the Uber license being revoked, Kabbee’s fleets have seen their driver numbers swell by 20 percent in a week, which indicates that a market-based solution is already gathering pace.
CEO & Founder, Kabbee