Issues relating to the licensing of taxis and private hire vehicles

     Written evidence from Department for Transport (TPH 05)

1. The Department for Transport has responsibility for the legislative framework governing taxis and private hire vehicles in England and Wales. (The Scottish Executive is responsible for Scotland and DoE(NI) for Northern Ireland.)

Introduction

2. There are two distinct types of exclusive driver and car hire services:

· Taxis (legally referred to as hackney carriages), which ply for hire from ranks and can be hailed in the street; and

· Private hire vehicles (PHVs – sometimes known as minicabs) which must be booked through a licensed operator – normally by telephone or by calling in person at an office.

3. The taxi licensing regime involves two types of licence – a driver licence and a vehicle licence.

4. The PHV licensing regime involves three types of licences – a driver licence, a vehicle licence and an operator licence. (In the case of PHV licensing, if an individual intends to set up as a one-person-operator using his own vehicle and arranging and carrying out his own hirings, he would need to acquire an operator licence, a vehicle licence and a driver licence.)

5. There is a degree of overlap in terms of taxis undertaking pre-booked hirings, but the trades are subject to distinctive licensing and regulatory regimes reflecting the permitted methods of hiring.

Role of the Secretary of State

6. The role of the Secretary of State is to provide the overall legal framework for taxis and PHVs and to initiate changes to it as necessary – as either policy, or the world in which it operates, changes and develops, and to consider the modes within the context of wider public transport provision. The Department is the focal point within central Government for the taxi/PHV trades and regulators.

7. The Department also provides Best Practice Guidance for taxi and PHV licensing authorities. The first version was published in 2006; it was prepared in response to a recommendation from the Office of Fair Trading which took the view that the standards adopted by licensing authorities varied greatly and Guidance could be helpful in encouraging a greater degree standardisation around the country.

8. There are some 75,000 licensed taxis and 150,000 PHVs across some 300 licensing authorities in England and Wales.

An overview of the four licensing regimes

9. The legislative framework governing taxis and PHVs has given rise to four distinct licensing systems:

(i) Taxi licensing in England and Wales outside London (the principal Act is the Town Police Clauses Act 1847);

(ii) Taxi licensing in London (the principal Act is the Metropolitan Public Carriage Act 1869);

(iii) PHV licensing in England and Wales outside London (the principal Act is the Local Government (Miscellaneous Provisions) Act 1976); and

(iv) PHV licensing in London (the principal Act is the Private Hire Vehicles (London) Act 1998).

10. These four different licensing regimes which are administered under legislation dating back to the early part of the 19th century have generated a highly complex legislative landscape. This is particularly so against the background of many years of case law to establish exactly what certain elements of the law actually mean.

Licensing standards and policies

11. The primary legislation governing taxis and PHVs is largely of an enabling nature and, consequently, local licensing authorities use the discretion available to formulate their own policies tailored to their own assessment of local conditions and circumstances.

12. With regard to drivers, the primary legislation in most cases states a length of time which an applicant must have held a full ordinary driver licence before being eligible for a taxi or PHV driver licence. However, the licensing authority must then satisfy itself that an applicant is fit and proper to be a taxi or PHV driver. This is where licensing authorities have discretion. The assessment process will typically include a criminal record check, a medical check, a topographical knowledge test and perhaps a special driving test. It is up to individual licensing authority to decide what constitutes fit and proper; what elements should be assessed and to what standard.

13. Similarly, with regard to vehicle licensing, it is up to licensing authorities to decide which vehicles they are prepared to accept for licensing. Taking accessibility as an example, some licensing authorities require all taxis to be wheelchair accessible, others require some of the taxi fleet to be wheelchair accessible (a popular approach is to remove a quantity restriction but impose a higher quality threshold for any additional taxis) and some licensing authorities allow saloon car taxis, with any wheelchair accessible vehicles being licensed simply because the owner wants to use such a vehicle for commercial reasons.

14. The Department provides Best Practice Guidance for licensing authorities to assist them in drawing up suitable licensing policies. The underlying message in the Guidance is that licensing authorities should not over-regulate; they should bear in mind the costs associated with any requirements they impose and should ensure that their requirements are commensurate with the objectives which they want to achieve.

15. The Guidance is voluntary rather than mandatory but the Department takes every opportunity to urge licensing authorities to adhere to it.

16. There is a right of appeal to the courts for applicants outside London who are refused a licence. Inside London there is provision for reconsideration by the licensing authority before going to the courts.

Operational policies

17. As well as providing a framework for the granting of licences, the primary legislation also sets out the parameters within which licensed drivers and operators can provide a service.

(i) cross-border hirings

18. Although licensing is undertaken (outside London) at district level, people’s travel patterns are not limited by local authority boundaries and there is, inevitably, much demand for journeys which go beyond district boundaries.

19. The extent to which both taxis and PHVs can provide a service which takes them beyond – or wholly outside – their own licensing area has been the subject of much case law over many years.

20. In the case of taxis, the law is clear that they can only ply or stand for hire within their own licensing area. This could be the whole of the licensing authority’s area or, where an area is divided into smaller zones, it could be in one or more of those zones.

21. However, recent case law, Stockton-on-Tees Borough Council v Fidler (2010) EWHC 2430 (Admin) has established that a taxi can undertake a pre-booked hiring anywhere in the country. The Department recognises that this judgment has generated a degree of concern from people who consider that it undermines the territorial nature of the legislation.

22. In particular, the judgment raised concerns about the extent to which licensing authorities can engage in enforcement activity against hackney carriages which are working in their district despite being licensed elsewhere. Licensing authorities have expressed concerns about the passenger safety implications associated with this pattern of operation.

23. In the case of PHVs, case law has established that an operator licensed and located in district A can arrange a hiring involving a journey which goes into district B, or which is wholly within district B, so long as he uses for that journey a driver and a vehicle licensed by the same licensing authority as granted his operator’s licence.

24. The Department has received representations from people who are concerned about the way in which some drivers are routinely waiting in a different district to that for which they are licensed in order to be allocated by their operator over the radio a job which involves a journey wholly in that district.

25. This is lawful, but it has attracted a good deal of criticism from the indigenous trade (both taxi and PHV) which objects to the influx.

26. The representations propose amending the legislation such that PHVs which go into a neighbouring district to undertake or complete a hiring must return to their home district before being assigned another job by the operator.

27. The Department takes the view that this is an issue which should more appropriately be considered in the context of a wider review of the legislation, rather than in isolation.

(ii) Sub-contracting

28. There is a problem associated with the sub-contracting of bookings across district boundaries.

29. Case law has established that it is unlawful for an operator licensed under section 55 of the 1976 Act to sub-contract a booking to an operator who is licensed under the same legislation but in a different district.

30. The Department has received representations to the effect that this is particularly restrictive. Operators tend to build up contacts around the country, particularly through national associations and trade groups, but they cannot make use of these contacts for working purposes. Ideally they would like to be able to sub-contract bookings in emergency situations eg for an airport pick-up when the vehicle on their own circuit breaks down.

31. This is particularly anomalous when viewed against the background of the newer London legislation. The Private Hire Vehicles (London) Act 1998 allows an operator licensed under section 3 of the 1998 Act to sub-contract a booking not only to another operator licensed in London – but also to any operator licensed under the1976 Act. This is a clear discrepancy in the treatment of operators inside and outside London and one which the Department intends to address when it next undertakes a review of the legislation.

(iii) Fares

32. The law allows licensing authorities to set fares for taxis; the vast majority do so in the interests of consumer protection. A passenger seeking an immediate hiring, particularly one who is visiting an unfamiliar town, is in a particularly vulnerable position with regard to unscrupulous behaviour. A tariff fixed by the licensing authority and the existence of a taximeter (optional, but invariably fitted) provides the passenger with adequate protection.

33. When a taxi driver is plying for hire and accepts a journey where the destination is within the licensing area, he must adhere to the tariff fixed by the licensing authority. However, if the taxi driver opts to accept a hiring which goes beyond the district boundary (which he is not compelled to accept) he can negotiate a fare with the passenger. In this way, the driver is compensated for the dead mileage he will incur in returning to his own district where he can once again ply for hire.

34. There is no provision in legislation for the fixing of PHV fares by licensing authorities. Each operator sets the rate for that operation on a commercial basis. The rationale for this is that, because a passenger must always book a PHV through a licensed operator, the contract is actually being made with the operator and the passenger can ask at the time of booking how much the journey will cost. And, because of the pre-booking requirement, there is a presumption that PHV passengers are in a better position than taxi passengers to shop around for a suitable price.

35. The Office of Fair Trading recommended in 2003 that there was scope for more price competition in the taxi and PHV sector. In particular they thought that taxi drivers should be regarding the tariff set by the council as the maximum that could be charged rather than the automatically applicable fare ie there was scope for offering fares which were less than that set by the licensing authority (more so in the pre-booked taxi sector than in rank or street hailings).

(iv) Taxi touting

36. We are aware that taxi touting is a particular source of concern to licensing authorities, and to many in the licensed trade who adhere to the laws within which they are permitted to operate. Taxi touting involves an individual proactively asking someone if they want a cab. It is an offence for a taxi driver to tout (he must wait to be approached); it is an offence for a PHV driver to tout (he must be allocated a journey by his operator) and it is an offence for a completely unlicensed individual with an ordinary car to go out touting.

37. The Department receives representations from time to time about this, mainly from the London licensed taxi trade who regard taxi touting as a particularly frustrating activity. And, of course, there are substantial public safety concerns associated with touting.

38. Licensing authorities are responsible for enforcement of the taxi touting law.

December 2010