Hire Authority: Turning Statutory Regulation into Private Regulation for the UK's Taxi Industry

Abstract

Over the past two years, there has been a worldwide regulatory backlash against new smartphone-app-based Private Hire Vehicle (PHV) operators, with Uber probably being the most emblematic one. While a few regulatory clarifications can be justified, the vast majority of measures have been transparent attempts to obstruct the growth of this sector to protect the interests of politically well-organised, competition-averse incumbents. Contrary to conventional wisdom, smartphone-enabled apps have not created an ‘unregulated’ private transport sector – on the contrary, they have fostered the emergence of regulatory brands. Organisations such as Uber do not just offer transport services, they also offer a set of rules and regulations under which these services are provided. This is regulation – but it is private regulation, or regulation by the market, as opposed to statutory regulation. The scope for competition has also been broadened as drivers compete with each other for custom; passengers compete for rides; and apps compete for users on both sides of the transaction. As with other Internet-based innovations, transport apps have increased economies of scale in private transport. London provides a suitable setting for reform. The milestones to be achieved include the abolition of taxi privileges and the equal treatment of black cabs and private hire operators. The London Taxi Drivers’ Association (LTDA) would be granted powers to regulate the quantity of black cab drivers and the fares to be charged (similar to how Uber and private hire firms oversee their own drivers and vehicles). It is important to note that the LTDA would not be given a monopoly – black cab drivers could over time decide to form competing brands and associations within the trade. Statutory regulations would be limited to criminal background checks; the monitoring of fraud and illegal behaviour; and a periodic review of the state of competition in the market. These tasks could be conducted by Transport for London (TfL), with the assistance of the Competition and Markets Authority in the latter function.