An Uber insider tells me not to write off the ride-hailing giant too soon, because it’s a very smart company for all its faults — and because the numbers of drivers and users for whom it is part of daily life will make it difficult for Transport for London to uphold its licence withdrawal on appeal, so long as Uber makes gestures of humility. But the moral of the story, says my source, is that as a ‘tech disrupter’ invading a regulated sector, the company created by Travis Kalanick ‘relished the fight with governments and entrenched interests far more than was normal or reasonable’, rather than seeking to be part of the urban fabric through collaboration or partnership.
Barriers to entry in ride-hailing are not high, because the software required is not so hard to replicate and there are always plenty of willing drivers. It took an ugly Uber to break through, like a snowplough on steroids, but over time its market share is bound to shrink. The next winners in the ride-hailing game will be those (more like its Californian rival Lyft, now reportedly talking to TfL) that promote themselves as better and kindlier citizens. Beyond that, however, science fiction beckons…
My man in the motor trade was enjoying the hospitality at the Frankfurt Motor Show when Uber’s news broke, and rang from a table-dancing club to give me his views. He says the buzz at the show is no longer about sleek models like the plug-in BMW i8 sports hybrid he came home with a couple of years ago, but about advancing technology in driverless navigation and battery power. He reckons that between five and ten years hence, the winners of the third stage of the ride-hailing race — whether Uber is among them, and whatever their marketing image — will be dehumanised operators of app-controlled fleets of driverless electric vehicles. Banks and investors will jump in as owners or lessors of the fleets, no doubt through impenetrable pyramids of offshore companies. And one day it will all come to grief in a driverless financial crash.
While we’re on this motoring theme, I wave my hat to billionaire industrialist Jim Ratcliffe, who has announced that he’s about to invest £600 million in the development of a British-built all-terrain vehicle to succeed the Land Rover Defender, which ceased production last year — and compete with the Toyota Land Cruiser, now the favoured transport of warlords and aid workers in inaccessible territories.
Lancashire-born Ratcliffe built a privately owned petrochemical conglomerate, Ineos, by buying unwanted subsidiaries from BP and other industrial groups. Latterly he spends more time in Switzerland and on his yachts than in Britain, where his willingness to confront unions at Ineos’s Grangemouth refinery made him a bogeyman for the left while his Eurosceptic bluntness put him out of tune with the business establishment. Now — unless Indian-owned Jaguar Land Rover fights back to stop him — he sees his car venture as a route to creating 10,000 jobs, helping arrest the decline in UK manufacturing and creating a rugged new symbol of British self-sufficiency around the world. So far the project is called ‘Grenadier’, after the London pub where it was conceived, but the model itself lacks a name: ‘Brexiteer’ seems the obvious choice.
When shadow chancellor John McDonnell talks of capping credit card debt to stop card companies charging excessive interest, and of Labour’s ambition to wipe off student loans that are unlikely ever to be repaid, you might think he has common sense on his side. When he talks of renationalising utilities and rail companies by forcing investors to accept bonds worth less than the previous market value of their shares, you might think he is aiming to right some of the fat-cat wrongs of privatisation. But what he’s really doing is encouraging Labour’s tribe to believe that concepts such as debt and shareholder rights are not fixed pillars of a free society but nuisances that can be shapeshifted at will by politicians. ‘Generally fermenting the overthrow of capitalism’ is the recreation he has long declared in Who’s Who, and bizarrely it’s not beyond possibility that voters will one day give him the chance to try.
‘Credit agencies don’t know any more about government budgets than the guy in the street,’ was a remark by David Wyss, a former chief economist of one such agency, Standard & Poor’s, with regard to their performance before the 2008 financial crisis, when they awarded the highest ‘AAA’ rating to many US mortgage-backed securities that turned out toxic. My own summation in 2011 was: ‘If there were ratings for ratings agencies, they’d all be junk by now.’ So I’m not particularly concerned — and neither were markets — by news that within hours of the prime minister’s Florence speech, Moody’s downgraded UK sovereign debt from ‘Aa1’ to ‘Aa2’ to reflect concerns about weakening public finances and the impact of Brexit. Gilt yields barely flickered, the pound traded down on Friday and back up on Monday; life went on.
But let’s not be entirely complacent. The UK used to rank AAA with both Moody’s and Standard & Poor’s and AA+ with the third name in this game, Fitch. Since 2013 all three have downgraded us — so that having long stood proud as a top-table safe haven for international investors, we’re now outranked by a dozen nations including Finland and Austria, and just one notch above Chile, Macau and Qatar. Is that really how we want the world to see us? Small consolation that Moody’s also moved us from its ‘negative outlook’ category to ‘stable’, indicating no further downgrade is imminent; but a long-term Brexit success test will be whether we ever climb back to AAA, even in the estimation of agencies we don’t much respect.
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