Uber: Convenience vs Controversy

16th February, 2016

If you have not heard of them yet, Uber is a company that has experienced a meteoric yet controversial growth in recent years. Founded in 2009, the company is now estimated to be worth $62.5 billion (£43 billion) but in its quick rise the firm has made plenty of enemies.

So what is Uber?

Uber, formerly UberCab, is a service that allows taxis to be hailed via an app, indicating where to be picked up from, where to be dropped off and showing how much the journey should cost. Also the app allows users to see where Uber drivers are located as well as share journeys with other users.

But Uber does not classify itself as a multinational taxi firm, instead they call themselves a car sharing service. What really separates Uber from regular taxis is that Uber drivers use their own cars for the service and they are not bound to the same regulations that taxi drivers are. But to become an Uber driver you must still pass a background check, supply the registration, provide proof of insurance and a driving licence and finally pass a simple test.

An important feature of Uber is that both the customer and the driver rate each other after the trip via the app. For customers the experience is always to the best standard and also safer, for the drivers it means the most disorderly customers can be avoided.

Since 2012, when Uber arrived in the UK, the service has become available in 12 locations: London, Birmingham, Manchester, Glasgow, Bristol, Leeds, Edinburgh, Sheffield, Belfast, Newcastle, Merseyside and Portsmouth. There is approximately 150,000 Uber drivers around the world and about 18,000 in London, which is almost the number of black-cab drivers.

Where did the controversy begin?

As Uber spreads across the world it has made enemies almost everywhere it has gone. Taxi drivers have held protests in several countries including the in USA, Germany, France as well as the UK. Tax authorities from various countries have also put up protest, suggesting that Uber and Uber drivers alike are not disclosing their full profits.

The issue with Uber operating in the UK is that its fares are calculated based on the distance of the journey and the time taken using GPS. Black cab drivers say that this is too similar to a taximeter which cannot be used in private hire vehicles. This was contested in high court with Uber winning the case. The Licensed Taxi Drivers Association (LTDA) had sought to impose a 5 minute delay to Uber drivers picking up customers as well as not allowing customers to see the real time location of Uber cars. After the decision the LTDA submitted an immediate appeal.

On Wednesday 10th of February, cabbies retaliated to the court decision by bringing the centre of London to a standstill.

Alice Cudlip, a taxi driver, claimed it was more than just the taxi business which was under threat: "Across London, smaller businesses are being taken away, everything’s becoming more bland. The taxi trade which has soul and tradition is being removed and that really makes me angry. Ultimately the government is bowing down to companies like Uber, who push them around and don’t pay tax - they pay as much as four taxi drivers."

It is true that Uber has paid little in corporation tax in the previous financial year, at just a total of £22,134, despite a profit of £866,000. However it was also taking into account previous years when they operated at a loss, plus it did not take into account the tax paid by individual Uber drivers on their earnings.

For the time being it appears that Uber will continue to operate as it has. Though it has come under heavy scrutiny from many groups across the world, it is still leading the way in which private transportation should be conducted. The case brought before the high court failed because the LTDA tried to take away some of the features which has made Uber more successful than their counterparts. For the black cab industry to compete with Uber they need to acknowledge their innovation and attempt to match them in quality, otherwise why would customers continue to pay more and receive less?

Insurance as an Uber Driver

Though Uber do not call themselves a taxi company, if you want to become an Uber driver you will still need to find the correct car insurance. With regular car insurance you will not be covered to drive for business purposes such as transporting paying customers or driving to pick up a customer. As an Uber driver you will still need private hire vehicle insurance to be correctly covered.