The Mayor of London has opted to protect privilege not competition
Sadiq Khan’s crackdown on London’s private hire industry is a sop to a privileged monopoly that distorts competitive markets and fails to defend consumer interests.
As private hire services make inroads into London’s black cab monopoly, the case to protect them from decline and enforce consumer safety may sound reasonable. But Khan’s reforms go beyond safety and are instead intended to block cheaper, more innovative companies’ access to the market, raising costs for the consumer and harming the poor.
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Requiring private hire drivers to pass an advanced driving and English-language test, offer mandatory contactless card payment options, and maintain commercial insurance will only serve to force cheaper, more efficient service providers out of the market. Most Uber users, for instance, pay via the app and enforcing card payment options simply places unnecessary costs on private drivers.
These drivers often come from disadvantaged backgrounds, yet they provide a valuable, cheap service to consumers. Regulating them out of the market to protect a privileged elite is immoral, perpetuating poverty and undermining Sadiq Khan’s commitment to improve living standards for all Londoners. It is London’s poorest consumers who will miss out on cheap taxi fares and the ability to locate drivers a few minutes away using a convenient mobile app.
Rather than creating unwieldy barriers to entry for more efficient and innovative firms, the traditional London cab needs to change with the times and lock into the improved technical know- how and better on-demand availability that firms such as Uber have introduced.
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The £5000 grant to scrap polluting taxis, along with Khan’s other concessions, is a manifestation of crony capitalism, distorting the market and perpetuating the London cabbies’ competitive lag.
Rather than subsidising this inefficiency, Khan should encourage London’s cabs to innovate, cost-cut, and reduce prices– a feat that Uber has managed to accomplish with little reward.