The Case for a National Taxi Service

Even with quality public transport, we might sometimes need cabs – and the best way to stop the exploitation of those who drive them is to organise a publicly owned system.

Credit: Jian Fan / Getty Images

It’s no secret that our experiment with privatised bus services has been a huge failure. Outside London, where buses remain highly regulated, fares have increased by 403 percent since 1987, while bus use has fallen 38 percent; meanwhile, bus companies shutting down unprofitable routes have left people in some suburbs and rural areas without reliable transport to workplaces, education facilities, and health services.

As well as providing poor services to the public, constant profit-seeking has pitted these companies against their workers. The most publicised recent example was Manchester bus company Go North West’s attempt to fire and rehire its drivers on poorer terms, effectively leaving them £2,500 a year worse off. This was while the parent company made a £121 million profit off its bus division over the course of the previous year.

Unsurprisingly, growing numbers of people are therefore calling for bus services to be brought back into public ownership. But even when we return to a bus system that serves community need rather than shareholder profit, we’ll still need a taxi service. The arrival of ride-sharing apps, such as Uber and Lyft, has shown that taxi services can be centrally organised on a national scale – but would a National Taxi Service serve us better?

Like Go North West, profit-driven ride-sharing apps try to push staffing costs down as low as possible. They hire their drivers as gig workers, regularly denying them minimum wage protection, paid holiday and sick leave, paid parental leave, and access to a company pension scheme. The corporations set the fare and compensation levels without driver input, meaning drivers can only earn more by working more. At the same time, the ride-sharing apps hire huge numbers of drivers, meaning that there isn’t always enough work to go around.

The monopolisation of the taxi industry by corporations like Uber and Lyft isn’t only bad for drivers – it ultimately results in higher prices for customers, too. As well as pushing down working conditions, ride-sharing corporations are charging artificially low prices in order to drive taxi firms out of business. The average taxi ride in the UK costs £3.73 per kilometre, while the average Uber costs £0.78 per kilometre; Uber maintains this low price while operating at a loss. Once the competition is gone, however, there’s no incentive to keep fares low. That’s when investors will reap their rewards – at our expense.

It’s theoretically possible for new taxi firms to come in and compete with lower prices, but in reality, once the huge players that dominate the market have a virtual monopoly, they’re likely to use their wealth to drive smaller newcomers out of business. They can afford to periodically flood cities or regions with advertising and offers of cut-price rides, while operating at a loss in those markets.

Unfortunately, it’s clear that our government doesn’t care to regulate unfair competition of this kind, or it would have already compelled ride-sharing apps to raise their prices to at least the point of breaking even. As it is, whoever has the deepest pockets steals the whole market – and that’s not your local taxi firm.

For those who think that competition between the handful of huge players in the market will force prices to remain low, we’d be wise to look at the US drug market. While other governments around the world routinely regulate or negotiate for low prices, the US leaves drug pricing entirely to the free market. As a result, insulin costs between four and ten times as much in the US compared to other wealthy nations. This is despite having three manufacturers competing for customers.

The truth is that when a handful of companies share a virtual monopoly in a market, they’re often smart enough to realise that they’ll make bigger profits if they all keep prices high and share the customer base. The fact that the companies are supposedly competing with each other also keeps regulators from claiming that they have monopoly power, and then regulating prices down.

A final problem with our current ride-sharing apps is that the taxis are only available to those who can afford them, rather than to anyone who needs them. While we generally want to encourage people to use public transport to save money and the environment, there are times we might want to subsidise taxi rides.

Some benefit claimants already receive subsidised transport when attending NHS-referred medical appointments, including by taxi when illness or lack of accessibility makes other options impractical. But for each journey you usually have to pay upfront, send off for a claim form, and then post it and your receipt back to a government office. This system creates work for both claimants and government workers, while also incurring a postage cost.

Creating a publicly owned National Taxi Service will eliminate all these problems. Under a National Taxi Service, drivers can be paid a guaranteed hourly wage, with a premium for working unsociable hours and holidays. They can also receive the other benefits of being real employees, such as paid holiday, sick leave, and access to a company pension scheme.

While private companies set fares to maximise profits, a publicly owned National Taxi Service could set fares at a level that balances the costs of running with the need for everyone to have access to transport. More importantly, fare levels and service quality would become political issues, subject to public debate and voter pressure. We would be able to choose, democratically, what our priorities for the service are, instead of having shareholders’ priorities imposed upon us. And if we decide that some people should be entitled to lower fares or free rides, that option can be updated once, at the click of a button, rather than having claimants post in forms and receipts after every journey.

Finally, if the software to run it is either developed in-house or put out to a fair tender process, the initial investment needed to set up the service should be modest. At present, workers both supply the vehicles and arrive fully trained to drive them, and given the newsworthiness of such a large and controversial government programme there’d be little need for initial advertising.

The current system is pushing drivers into poverty and forcing them to cope with the stress of precarious employment, while, in the long run, it will end up charging us more for rides than our traditional taxis did. It’s time to set up a publicly owned National Taxi Service that will deliver healthy and dignified employment to drivers, while providing all those who depend on it with the affordable and convenient transport they deserve.