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

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, in order to protect the interests of politically well-organized, 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. Organizations 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.

Ultimately, statutory regulations should be limited to criminal background checks; the monitoring of fraud and illegal behavior; and a periodic review of the state of competition in the market. These tasks could be conducted by Transport for London, and with the assistance of the Competition and Markets Authority in the latter function.

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