PENNY WISE, POUND FOOLISH

Uber pays London a license fee of just 12 cents per car, and the city has had enough

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London’s transport authority is overhauling the licensing fees it charges private car hire companies like Uber. It launched a public consultation April 20, proposing new fees that would add millions of pounds to Uber’s licensing bill.

That makes sense, because under the current scheme, Uber appears to pay an absurdly low fee. Assuming each of its 30,000 drivers in London have a licensed vehicle, it pays just nine pence per car (US$0.12) over the duration of the existing five-year license. Compare this to £744.00 per car for a firm paying the “small operator” fee with a fleet of two cars.

Transport for London didn’t name Uber, but said it spends £500,000 a year enforcing the license of the largest care hire operator, which undoubtedly is Uber. That operator pays a fee of just £565 annually. Car hire firm Addison Lee is likely to be the second largest, with 5,000 drivers (paywall). Only two firms have fleets larger than 1,001 cars in the city, according to Transport for London licensing statistics.

Vehicle licensing fee Per car
Small operators £744.00
Uber’s licensing £0.09
*Assuming two cars for small operators; 30,000 cars for Uber

The new fee system could go into force as early as this summer, Transport for London says. It could increase Uber’s licensing fee bill to an estimated £2.1 million over five years—not a small sum, but nothing a company with over $6.5 billion in revenue last year couldn’t handle. Uber has not yet responded to a request for comment from Quartz.

Current fee schedule
Number of vehicles in fleet Five-year fee
0-2 £1,488
3 or more £2,826
Proposed fee schedule
Number of vehicles in fleet Five-year fee
0-10 £1,988
11-20 £5,190
21-100 £22,014
101-1,000 £166,518
1,001 or more £166,518 + £68 per vehicle

Private hire licensing fees collected by Transport for London can only be spent on enforcement and compliance activities. The transport body says that it needs to change the way fees are levied because of the “dramatic” growth of the private-hire industry in recent years. That means it’s now spending a disproportionate amount of resources monitoring large operators. “Effectively, smaller operators are cross-subsidising the enforcement and compliance work generated by the larger operators,” the body’s consultation document reads. “We do not believe this is fair.”

The total costs of issuing and enforcing private hire licenses over the next five years is estimated to be £41.8 million a year, according to Transport for London. This is a significant increase over earlier projections. For enforcement costs alone, it represents a spike of 7.5 times, the transport body says. “The operators fees system is no longer fit for purpose,” Helen Chapman, general manager of taxi and private hire at Transport for London told the Financial Times (paywall).

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