Last weekend, Jeremy Corbyn raised an intriguing possibility. “Imagine an Uber,” he said, “run co-operatively by their drivers, collectively controlling their futures, agreeing their own pay and conditions, with profits shared or re-invested.” Many have since dismissed this idea as wishful thinking. First, there is Uber’s undoubted popularity among its users – hundreds of thousands of people signed a petition protesting against Transport for London’s decision not to renew Uber’s licence. Then there is its market dominance, which only ever seems to intensify. How
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Last weekend, Jeremy Corbyn raised an intriguing possibility. “Imagine an Uber,” he said, “run co-operatively by their drivers, collectively controlling their futures, agreeing their own pay and conditions, with profits shared or re-invested.”
Many have since dismissed this idea as wishful thinking. First, there is Uber’s undoubted popularity among its users – hundreds of thousands of people signed a petition protesting against Transport for London’s decision not to renew Uber’s licence. Then there is its market dominance, which only ever seems to intensify. How can any rival hope to compete in the increasingly monopolistic world of private hire?
Finally there is the factor which underpins both its popularity and its dominance. And that’s its price point. When Uber came on the scene, it undercut other taxi services by a huge margin. And it appeared to do so by spending vast amounts of venture capital in a bid to achieve global dominance of the market. Any co-operative, driver-owned alternative to Uber has to be competitive on price or it will never break through Uber’s grip on the market. How can they do that without spending vast amounts of capital? Where would that money come from?
We believe a driver-owned alternative could genuinely compete with Uber on price and convenience, especially if supported by the Mayor of London.
None of these arguments holds water. At the New Economics Foundation we recently called for ‘Khan’s Cars’, a mutually owned taxi platform for London which would give drivers real control over their working lives while still providing people with the cheap and convenient transport they need. We believe a driver-owned alternative could genuinely compete with Uber on price and convenience, especially if supported by the Mayor of London.
In fact, Uber isn’t as cheap as it seems. The company’s use of surge pricing, which inflates prices during periods of high demand, allows it to present cheaper prices at other times. Partly as a result of this, Uber makes a profit in the UK – suggesting the basic pricing model is financially viable without vast capital resources. So the gap to close isn’t as wide as it may look at first glance.
Furthermore, Uber takes between 20-25% of the fares it charges. Khan’s Cars could reduce that percentage since it will not have shareholders looking to extract profit.
If an alternative to Uber can compete on price and convenience, the prize is a taxi service which puts drivers in control of their working lives, with decent working conditions. And because it would not be motivated by the need to cut regulatory corners, it could offer improved safety for passengers.
It’s an idea which is attracting more and more support. We are already working with drivers in Bradford and Leeds to set up their own taxi service platform. Now we want to bring that effort to London. We’re working with drivers, tech companies, unions and civil society organisations to build the support and resources for a real alternative.
Uber is facing reputational problems not just in London, but all over the world. A co-operatively owned alternative would avoid that trap. As Uber struggles to stay on the right side of the law, perhaps the fanciful idea is not so much creating an alternative, but carrying on with the status quo.