What is the future for the UK taxi industry post Covid-19? – The London Economic

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What is the future for the UK taxi industry post Covid-19? – The London Economic

June 11, 2020 Syndicated 0

For many city dwellers the dramatic improvement in air quality they have experienced over the past few weeks has been a welcome silver lining to the daily traumas of Covid-19. However, as lockdown begins to be relaxed and people need to return to work, how are urban centres going to balance environmental, health and safety concerns with the challenges of bringing the UK economy back to life?

This question is a critical one for UK’s 360,000 taxi drivers, who have found themselves on the front line of this debate, as they try to maintain their livelihoods while facing threats from all sides. Pomanda.com has analysed the performance of the 3,944 taxi firms across the UK with annual sales of £50k and above. These firms together contribute over £3.6 billion to the UK economy, the vast majority of which goes to pay the salaries of drivers and administrators. The average firm has annual sales of £917k and cash reserves of just 29k (less than two weeks’ worth), making them very vulnerable to the current crisis.

Data released by the Office for National Statistics (ONS) covering England and Wales reveals that the highest rate of deaths (after male security guards) was 36.4 deaths per 100,000 among male taxi drivers and chauffeurs. Clearly social distancing is challenging for anyone not in one of London’s estimated 21,000 black taxis, which are already fitted with partitions between drivers and passengers. Minicabs have been struggling to catch up with major operators such as Addison Lee now fitting perspex partition screens between drivers and passengers across its 4,000 vehicles and the app Uber piloting the use of partition screens in the North East of England.

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Desperate to get back to work

The UK’s taxi drivers are now desperate to get back to work, given that 83 per cent are self-employed, typically have high fixed vehicle costs and are unlikely to benefit to any degree from Government support. The Prime Minister’s announcement that those who cannot work from home should return to work, appeared to clash with the Transport Secretary’s statement on 14th May that “It is your civic duty to avoid public transport wherever possible”. However, these mixed messages would seem to present an opportunity for the taxi industry as an effective, ready-to-go option to avoid street being flooded with private vehicles (as has happened in many countries around the world).

This opportunity comes not a moment too soon. Further analysis by Pomanda.com of the 2,054 taxi firms with annual sales over £50k, which have been operating for at least the past 5 years has shown that the sector was already struggling before Covid-19. Annual sales have only grown by 2.8 per cent over this period, while profit before tax has declined by 13.4 per cent and cash reserves by 9.7 per cent. “Traditional taxi firms have been challenged by the arrival of global technology players such as Uber with almost unlimited financial resources” says George Pennock, Director at Pomanda.com. “At the same time, they have faced pressures from increased environmental levies/taxes and growing challenges from city planners looking to reduce car numbers.”

Inappropriate luxury

The challenge to taxis from the environmental sector also remains intense. Some are now arguing that in a post Covid-19 world where every square meter of city centre street will be needed for social distancing, unnecessary cabs will be an inappropriate luxury. They say that towns should cut the number of licenced cabs and restrict usage to specified essential journeys and for disabled people. In addition, some argue that taxis should be required to become 100 per cent app-based, to end the congesting cruising for custom. They point to the huge take up of hired bikes (Santander hire out over 870k ‘Boris bikes’ per month in London) and the burgeoning electric scooter industry, where trials are underway to potentially legalise this as a new form of transport in cities across the UK. They argue that with visionary leaders, the Covid-19 crisis could lead to cities that are where the air is cleaner, accident numbers are lower and congestion is a thing of the past.

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However, as with many of the choices which Governments and cities are going to have to make in the months ahead as they stumble out of the Covid-19 tunnel, there are going to be different constituencies to consider and no easy answers. In all cities, there will be the need to find a balance between environmental concerns and providing a range of valid options for citizens with different travel requirements, different wallet sizes and different health and safety concerns regarding Covid-19.

The taxi sector is one which cannot easily be ignored and its ability to survive and reinvent itself will form a critical part of the nation’s civic transport strategy. Its success or failure will also prove crucial for the financial health of its hundreds of thousands of drivers, most of whom cannot afford to be left out of a job at a time of rising unemployment and economic uncertainty.

Related: Government gives assurances to anti-quarantine group while passengers say they are oblivious to new rules

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