Transport for London (TfL) today effectively banned Uber from the capital, saying the company was not a “fit and proper” operator.
TfL said safety breaches had “left passengers at risk” and that Uber did not have “a robust system for protecting passenger safety”. It added that a “pattern of failure” was behind its decision to strip Uber of its London licence.
TfL said Uber had unlicensed operators upload photos on other people’s accounts, leading to at least 14,000 trips involving these fraudulent drivers.
All these journeys were uninsured and some of the drivers were unlicensed, including one person who previously had their licence revoked by TfL.
Another issue saw banned drivers make new accounts and continue to pick up passengers, further “compromising passenger safety”.
TfL also found a number of Uber drivers did not have proper insurance to operate.
TfL acknowledged the ride-hailing company had taken some steps to improve its safety procedures in the past 18 months, including enhanced transparency.
However, the measures were not deemed sufficient for a licence extension.
A spokesperson for TfL said: “A pattern of failures placed passenger safety and security at risk meaning TfL cannot renew licence.”
Uber now has 21 days to appeal the decision and will be able to operate in the meantime.
The company’s UK general manager Jamie Heywood called the decision “extraordinary and wrong” and confirmed the company would appeal.
“We have fundamentally changed our business over the last two years and are setting the standard on safety,” he said.
“TfL found us to be a fit and proper operator just two months ago, and we continue to go above and beyond.
“On behalf of the 3.5m riders and 45,000 licensed drivers who depend on Uber in London, we will continue to operate as normal and will do everything we can to work with TfL to resolve this situation.”
Uber shares face new investor pressure
Uber’s shares sank almost six per cent in pre-market trading to come close to their all-time low, recovering slightly to stand 4.5 per cent down at $28.24.
Analysts warned of a “rocky ride” for the firm’s share price today.
CMC Markets’ David Madden said Uber’s shares “are likely be under pressure” when the Nasdaq opens, while Markets.com’s chief market analyst, Neil Wilson, said the ruling represents a “clear and obvious hit to revenues”.
“Competition in the shape of Bolt and Ola are ready and willing to step in at the drop of a hat in the capital and it could be forgotten pretty quickly once gone,” he added.
“More broadly it betrays the scope and depth of the legal and regulatory problems faced by Uber. The list of legal issues is long and broad in its scope and geography. These present ongoing overhang for the stock as, whilst there have been problems about corporate culture, largely the run-ins with the regulators and policymakers pertains to the very structure of the business itself and how it operates.”
Sadiq Khan approves of Uber ban
Mayor of London Sadiq Khan said he supported the decision.
“Keeping Londoners safe is my absolute number-one priority, and TfL have identified a pattern of failure by Uber that has directly put passengers’ safety at risk,” he said.
“There is undoubtedly a place for innovative companies in London – in fact we are home to some of the best in the world. But it is essential that companies play by the rules to keep their customers safe.
“Only in the last few months it has been established that 14,000 Uber journeys have involved fraudulent drivers uploading their photos to other driver accounts – with passengers’ safety potentially put at risk getting into cars with unlicensed and suspended drivers. At this stage TfL can’t be confident that Uber has the robust processes in place to prevent another serious safety breach in the future.
“I know this decision may be unpopular with Uber users, but their safety is the paramount concern. Regulations are there to keep Londoners safe, and fully complying with TfL’s strict standards is essential if private hire operators want a licence to operate in London.”
TfL vs Uber: A long saga
Uber was originally banned from operating in London in 2017, after it was then also found to be “not fit and proper”.
It was granted a 15-month licence in 2018 with a set of regulatory conditions by the chief magistrate.
The company’s licence was renewed for just two months in September, after TfL said it needed to see more evidence that Uber could “ensure passenger safety”.
The transport body implemented a number of restrictions on the tech giant during the two-month probationary extension, including more stringent driver and licence checks.
Helen Chapman, director of licensing, regulation and charging at TfL, said the company had made improvements in this time, but that it was “unacceptable that Uber has allowed passengers to get into minicabs with drivers who are potentially unlicensed and uninsured”.
“It is clearly concerning that these issues arose, but it is also concerning that we cannot be confident that similar issues won’t happen again in future,” she said.
“If they choose to appeal, Uber will have the opportunity to publicly demonstrate to a magistrate whether it has put in place sufficient measures to ensure potential safety risks to passengers are eliminated.”
Controversial move sparks mixed reaction
Steve McNamara, general secretary of the Licensed Taxi Drivers Association, said: “The Mayor has absolutely made the right decision in refusing to re-license Uber, and Londoners will be safer as a result.”
GMB regional officer Steve Garelick said: “Uber pulled more stunts than a Hollywood movie, now it’s time for them to accept their responsibilities.
“We fully expect the Supreme Court to uphold the ruling of the Employment Tribunal, the Employment Appeal Tribunal and the Court of Appeal on driver’s worker rights in July.
“GMB wants to protect honest drivers, but it’s perhaps time for them to look elsewhere to work.”
The Adam Smith Institute has labelled Transport for London’s decision to strip Uber of their licence a “total disgrace”.
The institute’s head of research Matthew Lesh said: “Labour mayor Sadiq Khan’s decision to strip Uber of their operating licence on spurious grounds is a total disgrace.
“He has sided with the vested interest of Black Cabs — who want less competition — over the interests of all Londoners.”
Conservative candidate Shaun Bailey was also critical of the decision.
“Unfortunately, we have now come to the point where London’s reputation as a world class city that is open for business has taken a hammer blow,” he said.
“Sadiq Khan has had two plus years to come up with a policy on ride hailing that both respects London’s iconic Black cab trade and meets Londoners’ needs and he hasn’t delivered.”