Thursday, 5 October 2017

More London taxi-based rent-seeking fun

From The Daily Mail:

The number of Uber drivers in London should be capped to ensure 'healthy competition and consumer choice', the boss of a rival minicab app has claimed. Kabbee chief executive Justin Peters called for a limit on the proportion of minicab drivers overseen by one company if Uber overturns a decision not to renew its operating licence.

'Nuff said.

From The Evening Standard:

An "extortionate" rise in licensing fees for private hire car operators in London will force thousands of drivers out of work and close hundreds of cab firms, it was claimed today. Transport for London has approved increases that will see five-year fees leap from less than £3,000 to £700,000 for some operators.

The charges, which last rose in April 2013, depend on the number of cars run by firms. Those with between 101 and 500 will see their licence fee jump from £2,826 to £150,000. Operators with 501 to 1,000 cars will see their bill jump from £2,826 to £350,000 over five years, while those with 1,001 to 10,000 cars will see their fee go from £2,826 to £700,000.

1. TfL is doing a bit of bureaucratic rent-seeking here. It's budget is about £200 for each driver and each car per year for monitoring, which is of course way too high.

2. If it really cost this much (which it doesn't), it would seem reasonable to charge £200 per driver and per car a year. So if anything the charges are too low.

3. A minicab business with 10,000 drivers is only paying £14 per driver per year (£700,000 ÷ 5 years ÷ 10,000 drivers). This is a slap in the face for a business with 1,001 drivers, which has to pay £140 per driver per year (the same calculation applies in every band) and acts as a sort of barrier to entry/growth. The marginal hit from going from 999 to 1,001 drivers is more or less infinity for those last two drivers.

4. Nonetheless, those charges aren't huge, absolute maximum about £3 per driver per week, divide that by a few dozen journeys and it's next to nothing. If they add that to their fares, it is not going to make a measurable difference to quantity demanded, so the claim that this "will force thousands of drivers out of work and close hundreds of cab firms" is complete and utter bollocks.


Lola said...

Hence proving my point that none of these bureau ratic regulators charges fees. They are all revenue maximising trading taxes.