What if Uber is Gone in London for Good?
By: Ethan Friend
Tags: Economics, Politics, News, Uber, London

Photo by Dan Gold on Unsplash

On the 25th of November 2019, Uber lost its license to operate in London after repeated safety failure, claimed by Transport for London.

Reasons for this included a change to Uber’s systems which allowed unauthorized drivers to upload their photos to other Uber driver accounts.

It also meant there were at least 14,000 fraudulent trips in London in late 2018 and early 2019. It was found that dismissed or suspended drivers had been able to create Uber accounts and carry passengers.

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Uber has faced pressure from regulators around the world over the way it treats its drivers, competition concerns, and fears about passenger safety.

Uber is going to appeal this decision so a magistrate will have to decide whether Uber is fit to hold a license in London, or not. A decision from a magistrates court could take weeks or months and unless the court decides otherwise, Uber will retain its license during this period too.

However, if Uber loses its case in court, what could this mean for its users in the city?

The Drivers

Around 45,000 people work for Uber in London, making it a vital area of concern if the company is forced out of the city.

If these people are to be made redundant from their jobs, we can expect to see a rise in Sectoral Unemployment. Meaning the demand for labour is less than its supply in the individual labour market.

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Due to the geographical immobility of labour, it may be difficult for most drivers to leave London and find other areas where Uber functions to work.

Moreover, it can be difficult for Uber drivers to move into work in different job sectors as it often requires certain skills or qualifications.

What Unemployment Means

If 45,000 workers in London lost their jobs and, due to the reasons discussed, were unable to find another occupation, there could be a large issue.

This could potentially mean many millions of pounds a year being further spent on benefit payments (through job seekers allowances) by the UK government, thus leading to an increase in the size of the budget deficit, a cause of much concern already in Britain.

Uber Customers

The whole purpose of removing Uber out of London was to maintain the safety of the people in London. However, it has become highly popular and heavily boasting approximately 3.5 million users in the city alone. As stated by London Mayor Sadiq Khan:

“I know this decision may be unpopular with Uber users, but their safety is the paramount concern. Regulations are there to keep Londoners safe.”

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For transport around London, people will either have to compromise using bus services, the tube, etc or be willing to spend extra on trips in a classic London Taxi.

For people who use Uber eats, they would have to either collect meals themselves or use other businesses, such as Deliveroo.

Conclusion

Photo by Arvydas Venckus on Unsplash

Overall, the loss of Uber in the City will be very damaging to the labour market in the taxi industry.

However, if it was to collapse, it would not be long before a new competitor took over the market offering the exact same service.

Nonetheless, there can be a positive outlook on it. The classic British black Cab has recently been outcompeted by Uber due to their lower prices. however, now it may regain its popularity again. The black cab is an iconic London piece of culture and it is important we maintain the city’s international identity.