THE FUTURE OF A BRAVE NEW WORLD?
This is not a crystal ball gazing exercise. Instead, I want to outline possible future pathways for our industry. At present, we have the issue of cross-border hiring, or remote licensing as I prefer to call it, where drivers, vehicles and operators are licensed by a council in one area, but operate and work elsewhere, perhaps a hundred miles or more
away. This serves to
undermine the integrity of local democratic control, as operators seek to avoid such local regulation by going to another authority, which can license them more cheaply, with fewer hurdles, and give them access to an abundance of drivers.
The peer-to-peer app companies thrive on this arrangement, as it enables them to recruit an ever- increasing number of drivers and vehicles and set them loose on the entire country, penetrating further into smaller towns and rural areas. This is only necessary given how inefficient their business models really are. They function largely as an on-demand-only service. Fluctuations in supply and demand are managed through a dynamic pricing structure, where fares increase during periods of high demand, and then fall again when demand is met.
The only other way to manage these fluctuations is to ensure high numbers of drivers to the point that they struggle to earn a living wage without working excessively long hours, which, in turn adds to the number of drivers working at any given time. By long hours, I mean16-hour days/80 or more hours per week. The ten-hour limit of the best-known p2p app operator only applies to driving time, and not to total working time. Drivers could therefore easily work 20 hours before reaching this driving time limit.
‘Surges’ in fares during periods of high demand become less frequent with an ever-increasing number of drivers and low fare rates make earning the equivalent of the minimum wage per hour after expenses almost an impossibility, even when the time worked excludes the time waiting for trips. This is detrimental to the health and well-being of drivers, and long working hours pose a risk to public safety. Let us not forget that the drivers are also members of the public.
I have seen numerous screenshots on driver app screens of typical lowball offers of, say £4, or even £3.50,
60
for a journey of less than one mile, but the job is more than 8 miles away, and in a fairly remote area where a follow-on trip nearby is very unlikely. I’ve also seen a screenshot of a trip from Manchester to Preston offered at £39.23 (£36.05 with holiday pay deducted) for a journey of 35.3 miles. This is barely over £1 per mile. After running costs, and a contribution to fixed costs it cannot pay minimum wage on a pro-rata basis when it works out at barely 50p per mile for the driver’s outward and return journey, unless the driver receives another trip to take them back to Manchester.
Our local authority’s Hackney Carriage Table of Fares as far back as 1995 was approximately at this rate. From lowest to highest, it was at the 40th percentile on the national fare league table. Fuel at that time was about 50p per litre, and a brand-new Ford Mondeo 1.8 Turbo Diesel was about £10,000 if purchased from a volume supplier to the trade. For comparison, the equivalent vehicle today, a Toyota Corolla Touring Sports Icon 1.8 Hybrid costs a shade under £26,000.
The p2p business model is essentially one combining long hours/low productivity with cutting-edge tech- nology. It is the perfect marriage of 19th century sweated labour to 21st century technology. Drivers are frequently still earning much less than minimum wage after costs, despite a certain Supreme Court ruling from a couple of years ago effectively outlawing this.
Modern slavery, anyone?
The traditional operators, the ones that accept bookings by telephone, as well as by app in many cases, do not need to manage fluctuations in supply and demand through dynamic pricing and saturating the market with high numbers of drivers. They can manage such fluctuations by accepting advance bookings and offering lead times to ASAP bookings during periods of high demand. This gives drivers continuity of work during these busy periods. It is a more efficient and productive model because it relies less on oversupply.
Unfortunately, oversupply by the p2p app companies, using drivers licensed remotely, affects the earning potential of all drivers, not just those working on the p2p platforms. Competition from an increasing number of drivers in any given area lowers earnings expectations for all drivers, including for hackney carriage drivers and private hire drivers loyal to their local base.
JULY 2024 PHTM
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