Transport for London’s shock decision to scrap Uber’s operating licence sparked a fierce debate on Friday as unions, politicians and rival services – hailing the move as a “historic” victory – clashed with the Silicon Valley giant, which in turn decried it as a sign that the capital is closed to innovation.

In a damning statement, the transport authority said that its regulation of London's sprawling taxi and private hire market is designed to ensure passenger safety. Uber, it determined, "is not fit and proper to hold a private hire operator licence".

It said that it considers the company’s approach and conduct “demonstrate a lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications”.

Uber said it was “astounded” by the decision and would immediately challenge it in the courts.

“By wanting to ban our app from the capital Transport for London and the Mayor have caved in to a small number of people who want to restrict consumer choice,” said Tom Elvidge, general manager of the company in London.

If the decision stands, it could put more than 40,000 licensed drivers out of work. He said it would “deprive Londoners of a convenient and affordable form of transport”.

An estimated 3.5 million people use Uber in London.

Mr Elvidge insisted that drivers who use Uber are licensed by TfL and have been through the same background checks as black cab drivers.

TfL said that its concerns relate to Uber’s approach to reporting serious criminal offences and to how medical certificates are obtained, among other things.

But Mr Elvidge said that the company had always followed TfL rules on reporting serious incidents and has a dedicated team working closely with the Metropolitan Police.

Friday’s decision, he added, will "show the world that, far from being open, London is closed to innovative companies who bring choice to consumers.”

Uber operates in more than 600 cities around the world, including more than 40 towns and cities here in the UK. Its current licence expires on 30 September. It has 21 days to appeal the decision from Friday, during which time it can continue to operate.

The privately-owned company, founded just over eight years ago, has been under severe fire from a growing army of critics in the UK, claiming that it unfairly skews competition and that it has not done enough to crack down on incidents of violence involving drivers.

As such, unions, employment lawyers and worker’s rights advocates applauded TfL’s decision.

The Licensed Taxi Drivers Association, one of the most vocal critics of Uber in the UK, said that TfL had done the right thing by putting public safety first.

“Since it first came onto our streets Uber has broken the law, exploited its drivers and refused to take responsibility for the safety of passengers,” Steve McNamara, the General Secretary of the LTDA said.

“We expect Uber will again embark on a spurious legal challenge against the Mayor and TfL, and we will urge the court to uphold this decision. This immoral company has no place on London’s streets”.

The GMB Union dubbed the move a “historic victory”.

“As a result of sustained pressure from drivers and the public, Uber has suffered yet another defeat - losing its license to operate in London,” Maria Ludkin, GMB’s legal director said.

“No company can be behave like it's above the law, and that includes Uber. No doubt other major cities will be looking at this decision and considering Uber’s future on their own streets,” she added.

Lawyers welcomed the decision too, adding, however, that it also underscores the need for greater protection for people who are in insecure work.

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“It highlights the vulnerability of gig economy workers, because they are classed as ‘workers’ rather than employees, so there will be no right to a redundancy payment and no obligation to consult,” said Nick Elwell-Sutton, an employment partner at London-based law firm Clyde & Co.

In July, Matthew Taylor, a former policy chief to Tony Blair and chief executive of the Royal Society of Arts, published a detailed review into changing working practices in the UK and what must be done to crack down on unfair practices.

“Whatever the Uber appeal result, there will be plenty more battles ahead for people working in the gig economy. Each case will depend on its facts, and the law in this area is far from clear,” said Matt Gingell, a partner at law firm Gannons, specialising in employment rights.

“Let’s hope that Matthew Taylor’s recommendations for better working practices are implemented as soon as possible.”

London is one of Uber's most established markets and Friday’s decision comes at a critical time for the group. It could embolden regulators in other countries to take a fiercer stand against the group. Uber is already battling a slew of legal cases and challenges in several US states and has been forced to quit countries including Denmark and Hungary.

In June, founder Travis Kananick resigned from his role as chief executive officer in the face of shareholder outrage over company culture.

Dara Khosrowshahi, Uber’s new chief executive officer who joined from Expedia, is also juggling legal suits alleging the company stole self-driving technology from Google parent Alphabet. A bribery investigation is ongoing in Asia.

One of TfL's concerns relates to Uber's use of secret software known as "greyball", which the company built to avoid regulators. Uber on Friday said that "greyball" had never been used or considered in the UK for the purposes cited by TfL.

Within hours of the decision, Uber had launched an online petition challenging it and emailed users asking them to support it. By late Friday it had garnered over a quarter of a million virtual signatures.

Dan Lewis, senior infrastructure adviser at the Institute of Directors, urged Uber to clarify how it will meet the standards outlined by the regulator but also demanded that TfL pay heed to London’s “hard-fought and positive reputation as a hotbed for disruptive innovation and tech-driven competition”.

“Regulatory hurdles should not be an insurmountable barrier to allowing consumers to use products if they find them useful,” he said. He also raised concerns about the human cost of the decision.

“TfL and Uber must come together to find a way through this because the bottom line is that competition driven by consumer choice is the cornerstone of the UK’s future economic success,” he said.

London Mayor Sadiq Khan was among the supporters of the decision.

“All companies in London must play by the rules and adhere to the high standards we expect - particularly when it comes to the safety of customers,” he said. “It would be wrong if TfL continued to license Uber if there is any way that this could pose a threat to Londoners’ safety and security.”

Senior MP Frank Field, who submitted a report to TfL in December 2016 calling on them not to renew Uber’s licence without first insisting on improvements in the company’s business model, said that the decision “could be a game changer for the gig economy”.

Wes Streeting MP and chair of the All-Party Parliamentary Group on Taxis, called TfL’s decision "courageous” and said that it shows that “no company, however big and powerful, will be allowed to flout our laws and regulations or jeopardise Londoner's safety without facing serious consequences”.

“Uber has not shown itself to be a fit and proper operator. It stands accused by the police of failing to properly handle serious allegations of rape and sexual assault of passengers. It had to be dragged through the courts to recognise its responsibility to provide even the most basic rights and protections to Uber drivers,” he said.

Smaller rival private hire operators welcomed the news too.

One called mytaxi, launched an instant promotion offering half-price rides "to undercut Uber on news that they are not fit and proper to operate".