RAC Foundation News - October 2019

Whatever your view of Uber – the future of mobility or a glorified mini-cab company; a tech-giant or a legacy industry repackaged; the poster-child for the gig economy or exploiter of cheap labour – there is no doubt that the company has high hopes for itself. Take its corporate mission: “We ignite opportunity by setting the world in motion”.

The trouble for the firm comes in translating its vision, and the rapidly-rising number of trips taken, into profit.

The company’s turnover is in the billions of dollars. But so too are its losses.

Uber’s share price is bumping along at the lowest level seen since the business listed back in the spring. It is a reminder for anyone involved in transport that there is no such thing as a free ride.

Whether it is in the private or public sector someone has to foot the bill for the way we get around. And ultimately that means either the user or the taxpayer (or a combination of the two) has to meet the full costs – not just economic, but also environmental and societal – of providing transport.

There are very good reasons why people should be encouraged to take the bus or the train, but historically both these services, have been regarded as net recipients of public funds. I.e. they have been subsidised.

Of course, these bald statements are open to almost endless debate and contradiction.

Calculating the true cost (or indeed benefits) of different modes of travel and transport is no easy matter. There are the obvious direct costs borne by the user (the price of a ticket or the price of fuel, for example) and less-easily observed costs borne by society as a whole (congestion, pollution, road deaths and injuries).

Things are complicated further by the changing prices we attach to negative impacts, either as a result of scientific insight or public opinion.
In the end though, adjusting the balance between different modes is at the whim of politicians, both national and local.

They can raise taxes on fossil fuels and cut taxes on greener sources of energy; they can charge vehicles to enter towns and cities or they can reallocate road space to favour certain types of vehicle (bikes, buses, taxis for example) over others (cars); they can increase or decrease the amount of regulation and red tape associated with varying methods of transport.

Such complexities are now being grappled with by the Transport Select Committee which has just called for a national debate on road pricing – prompted by the anticipated drop in fuel duty and VED revenue as the car fleet goes electric – ahead of launching a formal inquiry next year.
(The RAC Foundation has itself looked at the issue on several occasions. Most recently we contributed to a winning entry in the 2017 Wolfson Economics Prize which suggested a pay-per-mile charge collected by insurance companies.)

But in the face of each and every instance of fiscal and administrative manoeuvring the fact remains: there is no such thing as a free ride – someone, somewhere will end up paying the true cost of getting about.

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