RENTAL companies supplying Uber London drivers could face a swathe of immediate rental returns if the TFL ban on the ride hailing app sticks.
Drivers rent cars through a Uber portal called Xuberance populated by offers from a variety of rental suppliers.
If Uber’s private hire operator licence appeal fails there will tens of thousands of cars and drivers out of work.
Uber London is saying little about the Transport for London (TfL) decision not to renew the company’s private hire operator’s licence
That licence expires this Saturday – on September 30 – but is extended pending the appeal process.
“And that could take up to a year,” according to Richard Tester, marketing manager of the largest private hire car rental company in the capital, Hammersmith-based Otto Car Ltd.
He said it was “business as normal” and he was confident the crisis would be resolved, “otherwise it could be a bit of a seismic situation,” he conceded.
British Vehicle Rental and Leasing Association (BVRLA) said: “We haven’t had any concerns expressed yet but we will certainly watch with interest.”
Europcar, one of the leading rental companies involved, said: “Europcar does not provide comment on their commercial relationships.”
Driver’s PCO licence key points
- Can be fast-tracked in a day for £180 – rising to £310
- Means passing assessment for topographical training, basic medical, English speaking and DBS (enhanced Discharge and Barring Service) /CRB
- Holding a British/EU driving licence for at least three years.
London has 116,000 licensed private hire drivers and 88,000 private hire vehicles – compared with 65,000 drivers and 50,000 cars in 2013/14, in a public transport system run by Transport for London which has just revised its operator licence fees with substantial increases.
The Uber London operation is based on an estimated 30,000 to 40,000 self-employed drivers holding a PCO (Public Carriage Office – now under Transport for London) private hire driver licence.
They use cars which are inspected annually before being issued with PCO vehicle licences, subject to various conditions including being no more than ten years old and with at least Euro 4 emissions.
This is where the rental and leasing companies come in, hiring ready-to-work vehicles with a valid PCO licence to drivers with their own PCO licence to drive.
A key feature of Uber’s driver recruitment campaign is that applicants don’t need a car!
The TfL Uber London licence ruling
Transport for London (TfL) has informed Uber London Limited that it will not be issued with a private hire operator licence after expiry of its current licence on 30 September.
TfL’s regulation of London’s taxi and private hire trades is designed to ensure passenger safety. Private hire operators must meet rigorous regulations, and demonstrate to TfL that they do so, in order to operate. TfL must also be satisfied that an operator is fit and proper to hold a licence.
TfL has concluded that Uber London Limited is not fit and proper to hold a private hire operator licence.
TfL considers that Uber’s approach and conduct demonstrate a lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications. These include:
- Its approach to reporting serious criminal offences.
- Its approach to how medical certificates are obtained.
- Its approach to how Enhanced Disclosure and Barring Service (DBS) checks are obtained.
- Its approach to explaining the use of Greyball in London – software that could be used to block regulatory bodies from gaining full access to the app and prevent officials from undertaking regulatory or law enforcement duties.
The Private Hire Vehicles (London) Act 1998 includes provision to appeal a licensing decision within 21 days of it being communicated to the applicant. Uber London Limited can continue to operate until any appeal processes have been exhausted.
Uber has its own umbrella organisation, Xuberance, directing potential Uber drivers to a selection of Uber partner rental and leasing companies such Enterprise and Europcar as well as Otto, which provide a package including insurance and maintenance starting with one to 12 weeks’ rental.
The potential problem for the rental and leasing companies, and of course the drivers, is that if the appeal process is thrown out in the initial 21 days, the Uber operation will have to be suspended.
In that scenario the drivers will either have to find another company with private hire operator’s licence or obtain their own – which entails financial outlay and a time factor.
Otherwise they will have to hand back the car, which would create a major hiatus in London’s private hire rental sector with a surge of static vehicles not earning money and threatening a sudden influx on to the used market.
However the sector appears to be continuing to operate normally.
A spokesman for Enterprise said: “Enterprise rents cars to Public Carriage Office (PCO) licensed drivers who may derive work from Uber, as well as other companies.
“The agreements are with individual drivers, who receive an insured vehicle for the duration of the agreement. We’re continuing to service these individual customers.”
Rupert Pontin, a Vehicle Remarketing Association (VRA) board member, said of the potential threat of an avalanche of ex-private hire cars on the used car market: “I would be surprised if Uber do actually lose the licence.
“I believe that while they have made some serious errors in some instances around passenger safety and the reporting of incidents to the police, I think that procedural changes will mean that these objections can be resolved.
“There was also a question around Uber not checking driver backgrounds although Gareth Mead, the UK MD, stated yesterday on Radio 4 that TFL do the checks and that is their agreed procedure. [Interestingly that interview is currently no longer available on iPlayer.]
Even if they do lose the licence it is highly unlikely that all the drivers will come out of their cars in one go.
“There may be 40,000 registered drivers but many of these are part-time and one must also consider that there is a demand for the current volume of taxis/Ubers so these drivers will in the majority find other companies to work for.
“Therefore at this stage, whilst it is a valid question, I think the reality is that there will not be a huge volume of cars coming to the used market.
“I think this is TFL flexing their muscles and seeking greater control and regulation and in doing this Uber will have to get to the table and talk in detail. One to watch though but no need to panic quite yet.”
But just to compound the situation, TfL earlier this month agreed a major review of private hire licence fees.
While the old rate was £1,488/5 years for no more than two vehicles and £2,826 for more than two, there is a new scale – doubtless triggered by the Uber success and growth in the capital’s fleet.
This runs from £2,000/5 years for up to ten vehicles and then in bands up to £464,000/year (£2.9m/5 years) for the largest operators with more than 10,000 vehicles – like Uber London.
