Solving the Uber Congestion Problem

On Wednesday, New York City Council voted to impose a cap on Uber and Lyft licenses. No new private for-hire vehicle licenses will be issued for the next twelve months while the City Council studies the effect of ridesharing on congestion.

The news from New York comes a month after TfL announced that they plan to extend the Congestion Charge to private hire vehicles (including Uber).

There’s a growing concern that Uber (and its competitors) are leading to people taking fewer trips on public transport and more trips in cars causing congestion. While some research suggests that Uber actually reduces the total number of car journeys (and frees up parking spaces), it might be the case that in cities where public transport use is high, Uber adds to the total number of car journeys if it’s competing more with buses, trams and trains rather than other cars. This is very much an open question.

New York’s approach seems strictly worse than London’s approach. While in London, TfL are effectively removing an advantage Uber has over existing private cars and using a(n imperfect) price mechanism, New York are imposing a strict quota and favouring privately-owned cars over rideshares.

But London’s approach isn’t perfect. There’s a glaring admission. Black Cabs remain exempt. TfL justifies the exemption on two grounds.

  1. “A taxi driver, unlike a PHV driver, would be compelled to enter the Congestion Charging zone if required to do so when hailed or booked”

  2. “Taxis are a part of the accessible public transport network in central London.  We believe that it is right, therefore, that taxis continue to be exempt from paying the Congestion Charge.  PHVs which are designated wheelchair accessible will retain an exemption to the Congestion Charge.”

The first reason is weak. Black Cabs may have less ability to avoid central london, but they still impose the cost of congestion upon others. Also, Uber requires its drivers to take the fastest possible route as well, and while they could in theory, allow a lower cost Congestion Charge zone free route, in practice it seems unlikely they would offer it.

The second reason is more compelling, but exempting Black Cabs still isn’t the answer.

Rather than favour one mode of transport (at a relatively high price point) over another, we could instead give London’s wheelchair users more choice, while tackling the congestion caused by 22,500 Black Cabs.

It is important to remember that most Black Cabs journeys aren’t taken by wheelchair users, so exempting them altogether is a poorly targeted approach.

A better approach would include the 22,500 Black Cabs (as well as wheelchair-accessible private hire vehicles) and use the additional revenue (£58.5m per year assuming that each cabbie drives into the congestion zone 5 days a week) to pay London’s wheelchair users directly.

Roughly 1.8% of the British public uses a wheelchair. Assuming the proportion for London is the same then it implies there are 146,448 wheelchair users living in London today. They could all receive a £400 annual transport voucher (to be used how they please).

The policy has two major advantages over TfL’s current plan.

First, it substantially cuts the cost of travelling for wheelchair users. Not only are wheelchair users directly subsidised, they also can spend their voucher on alternative services such as Uber’s cheaper, but sometimes longer wait-time Access service.

Second, it ensures that we can tackle congestion without giving Black Cabs an unfair advantage over private hire vehicles.

In truth, extending the congestion charge to taxis and minicabs won’t be enough to seriously reduce congestion. To do that we need a real system of road pricing. Instead of a flat-rate, we should charge road users based on when, where and how long they drive for.