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Uber faces £2.1 million increase in London licence fees

Thanks to changes proposed by Transport for London (TfL), Uber could face a huge increase in operator licence fees in a further setback for the disruptive taxi-hailing app.

Yesterday, TfL launched a consultation on plans to alter the fee structure for private vehicle hire operators. TfL is aiming to establish a new system in which operators pay fees that better reflect the cost of regulating the sector.

With 30,000 licensed drivers in London, Uber is the city’s largest operator of private hire vehicles. The San Francisco-based taxi app allows users to instantly hail cheap private taxis on their phones in 570 cities.

The number of cabbies in London has expanded from 65,000 registered drivers in 2013-14 to more than 117,000 today, and current regulatory frameworks were not designed for the post-Uber private vehicle hire industry.

The new system would have a five-tier structure, with the largest companies being charged the largest licence fees. A small minicab company with fewer than 10 vehicles would pay £2,500 for a five-year licence, while Uber would pay £160,000 plus £68 per vehicle over five years. Uber could be expected to pay up to £2.1m for a five-year licence to operate in the capital.

This new fee structure would help fund the 250 extra compliance officers being hired to check insurance and other paperwork to regulate the industry. Enforcement costs of London’s minicab industry are expected to reach £30m over the next five years, up from an estimate of £4m.

Uber released a statement saying that it agrees that larger operators should pay higher fees, and would consider the details of the new system.

Since launching in North America in 2011, Uber has disrupted the traditional taxi industry, and is a pioneer in the sharing company. Its influence has led to changes in other sectors being referred to as ‘Uberisation’. However, some critics say that Uber has only become so successful by avoiding the regulations that apply to traditional minicab companies; American economist Richard D Wolff commented in a 2015 discussion that “Uber is competing with licensed taxi drivers who are vetted and certified and have vehicles that are maintained for safety. Being unregulated allows Uber to charge less for the same service as taxis.”

The licence fee increase is another setback for Uber in a chain of problems, including a legal case over the classification of Uber drivers as contractors or employees, and accusations that Uber employees have attempted to sabotage the business of competitors.

Uber Technologies also announced today that it is extending an internal investigation into sexual harassment accusations within the organisation, with a report expected at the end of May. In February this year, a former Uber engineer called Susan Fowler wrote in a blog post that after reporting her boss for unwanted sexual advances, managers and HR officers threatened her with a poor performance review if she pursued her complaints.

A report published in The Information yesterday has suggested that only 4 per cent of people who register to become Uber drivers are still working for Uber a year later.

While this was reported to be in part because of increased competition from companies such as Lyft and Gett, the main complaint among Uber drivers regards pay; specifically receiving unfair compensation for long trips, and being unable to accept tips.

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