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Spectator Briefing

Disruptive companies like Uber are the lifeblood of the free market

29 September 2017

1:56 PM

29 September 2017

1:56 PM

It has long been my understanding that innovative business entrants are the very lifeblood of our free market society. In recent months, however, you’d be forgiven for thinking this is no longer the case.

Uber, Taxify, AirBnB, Deliveroo, Amazon, Google, along with many other modern innovators, have at times been treated like pariahs. Some of this criticism has been legitimate, with shortfalls in conduct or corporate culture rightly condemned. But much of the vitriol appears to be fuelled by those who have lost out to what is simply a more competitive and appealing business model.

Customer service deficiencies or poor practices – even those that are easily addressed – are often blown out of all proportion by competitors who whip up a social media storm among their supporters. 

If one is publicly to support these new entrants, one must expect to face a campaign of vilification from the vocal blogosphere of the aggrieved.

Unfortunately, it is the case that politicians and regulators – plus the mainstream media – are guilty of being stirred by this frenzy. Too often they join in in kicking the new entrant in a way that often goes further than legitimate public scrutiny. 

Yes, Uber needs to show more integrity in its corporate governance. AirBnB must discipline those who misuse lettings and become appalling neighbours. Deliveroo should look at its employment practices and Amazon and Google should cease looking for every legal tax dodge.

But each of these companies is driving innovation in a way that few existing FTSE 100/250 Blue Chip listed companies do. Certainly in a way that the public sector never does. It is worth remembering London is one of the most expensive places to live and work globally. If we are to continue prospering, business innovation is crucial. 

We should also remember that new entrants are often a godsend to the young and less well-off, who cannot afford the price points of established big business and public sector giants. Shamefully our Tube is the most expensive metro system in the world. If we want to represent the interests of Londoners, competitive alternatives should be encouraged, not condemned.

Perhaps the most potent example of this is Uber. With 3.5 million registered users – almost half the city’s adult population – there is clearly a huge demand for its cost-effective services.

That does not mean it should be allowed to flout the rules. But one wonders whether the hysteria that greeted the behaviour of a small minority of its employees justifies the complete banning of the operation in our city.

It feels like TfL and Sadiq Khan have taken a sledgehammer to crack a nut. A slap in the face for young Londoners: the innovators of the future. Improper practices should be ironed out, but the decision not to renew the licence seems to have been largely driven by those who would benefit from the removal of a major competitor driving prices down – to the benefit of consumers.

Having now blocked Taxify’s operations and denied Uber a new licence, I hope TfL (and the Mayor) will think again on how it treats such new entrants. The Mayor is frequently telling us London is open for business. Based on the decision there will be many firms and young people who may have concluded the capital is closed.

Tony Devenish is a Conservative London assembly constituency member

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