The sense of corporate self-entitlement at Uber is astonishing. The US ride-hailing service thinks it is “extraordinary and wrong” that it has lost its licence to operate in London, a statement that could be made only by a company that believes failure to follow rules should have no consequences.
Transport for London’s central finding was that 14,000 Uber journeys were conducted between late 2018 and early 2019 by drivers who had faked their identity. Since any one of those trips could have meant that passengers were travelling uninsured, we’re not talking about minor technology glitches. Courts rightly tend to view driving while uninsured as a serious matter. Customers also want to know that the person behind the wheel has been authorised.
In these circumstances, a licensing authority could hardly give Uber a green light to carry on as normal. If TfL can’t be sure the firm’s claimed “fixes” actually work, removal of the licence is justified. Instead of bleating, Uber should console itself that it can operate as normal during the appeal process. Its arguments about technological improvements will get a hearing.
Free market thinktanks inexplicably feel obliged to come to the company’s defence whenever a regulatory hurdle appears, and the Institute of Economic Affairs did so again. It detects a protectionist plot to benefit black-cab drivers and called the effective ban on Uber in London a “dark day” for consumers, drivers and competition. Calm down, it’s nothing of the sort.
Other ride-hailing services are available. If newer rivals are able to navigate TfL’s standards for authorising drivers, why should they be under-cut by a company that is judged to be unfit? Drivers themselves are already learning to use multiple apps, so any dislocation would only be temporary and competition should still emerge. It’s up to Uber to do better.
When Banco Sabadell bought TSB from Lloyds Banking Group in 2015, the air was filled with confident boasts about how a liberated “challenger” bank would soon be providing stiff competition to the lumbering big beasts of the sector. Four years – and one IT calamity – later, TSB looks more like a case of the Spanish owner trying to minimise the pain from a mistaken acquisition.
Rather than trying to take chunks out of the opposition, TSB now merely aims to “restore” competitiveness via a new three-year plan. Some 86 branches, or 15% of the current tally, will be closed. Cost will be cut to force operating ratios into vaguely normal territory. Net lending will be increased by 5% a year to return TSB’s share of the market to a level enjoyed before 2017. And £120m will be invested in digital services, the area where the bank’s reputation for competence was whacked by last year’s botched IT upgrade.
The medicine is conventional and there isn’t a viable alternative to gradual self-improvement. But even a successful execution of a three-year programme is designed only to produce a return on equity in 2022 of 7%, less than the bank’s cost of capital. Lloyds, Barclays et al will not be quaking in fear. They prefer “challenger” banks that merely aspire to be less challenged themselves.
Sabadell is committed to owning TSB “for the foreseeable future”, thinks the TSB chief executive, Debbie White, and there’s no reason to doubt her. It’s not as if there’s a queue of would-be buyers obviously hammering at the door.
Neon-lit power play
Is it naughty of National Grid and SSE to play games with their holding company structures in response to Labour’s plan to renationalise parts of their business? Well, it looks shifty not to tell the shareholders unprompted – the Sunday Times at the weekend revealed the various shuffles to Luxembourg, Hong Kong and Switzerland.
But such manoeuvres were also predictable. Boards would be berated by their shareholders if they did nothing. The tactic is not about frustrating nationalisation; rather, the aim is to ensure compensation at a fair price via an action in a foreign court if necessary.
The shadow chancellor, John McDonnell, cannot be surprised by developments since his repeated claim about nationalisation prices being “set by parliament” was a neon-lit warning. If he’s determined to pay less than the regulated value of the assets, it’s not obvious how he would avoid time-consuming legal challenges.