From the Evening Standard, friend of rent seekers everywhere:
40 cab firms go out of business just months after 5,000% rise in fees
1. There are 2,400 cab firms in London, as the TfL lady says, 40 shutting down in a few months is not statistically significant.
2. The 5,000% rise is nonsense. The point is, TfL put the fees up from a token amount to 'real money' (average about £100 per car/driver per year, it would seem).The percentage increase is irrelevant if the starting figure is tiny.
3. TfL's new system is fundamentally flawed of course. The charge per year per cab/driver seems way too high as it can all be automated. Worse than that, they have a banding system:
Those with between 101 and 500 cars will see their license fee leap by 5,200 per cent from £2,826 to what the LPHCA calls an “extortionate” £150,000. Operators with between 501 and 1,000 cars could see their bill jump from £2,826 to £350,000 over five years.
Clearly, if you are running exactly 500 cabs, the average cost per cab/driver is £60/year, chump change. But increase that to 501 and the average cost is £140, which is clearly a barrier to growth, and will encourage businesses to merge into larger entities which are just below the upper limits, or for businesses which are just above the limit to scale back. See the example of Greyhound cars in the article.
What's wrong with a flat annual charge per cab/driver? That's what the cab people should be campaigning for, not against charges in general. As I explained before, divide £100 per cab/driver per year by thousands of journeys per year, and the added cost per journey is a few pence.
4. A TfL spokeswoman said... the fee rises were “proportionate” after a dramatic rise in the size of the industry over the last five years had greatly increased the costs of overseeing them. The fees will fund extra compliance officers “who do a crucial job in driving up standards and ensuring passengers remain safe”
That's bollocks. For sure, TfL's costs double if the number of cabs doubles, but the cost per cab is unaffected. Is that really the best justification that this multi billion turnover organisation has dreamed up over the past few months?
Debate Magazine
