The Government has rejected the Office of Fair Trading's central recommendation to remove the powers of local authorities to restrict taxi numbers.

The Government today announced that it has rejected the OFT's call for all controls on taxi numbers to be compulsorily lifted, but said that it "strongly encouraged" their removal "as soon as possible".  It said that restrictions should only be maintained if their removal would lead to significant consumer detriment due to local conditions.  While it believed that local authorities should be given the chance to assess their needs in view of the OFT's findings, the Government will ask restricting authorities to publicly justify their policy by March 2005, with an emphasis on consultation, transparency and up-to-date evidence.

Consumer Minister Gerry Sutcliffe said: "Restrictions on numbers of taxis can be a barrier to market entry, which can lead to lower consumer choice and lower taxi availability.  But it is important that local authorities are allowed to regulate local taxi markets to take exceptional local circumstances into account.  That is why we have decided not to remove this power from local authorities at this time.  But we're asking them to explain how any imposed restrictions benefit consumers."

However, the Government endorsed the OFT's recommendation for the Department for Transport to promote and disseminate local best practice in relation to quality and safety controls. It aims to consult on draft guidance this summer, with a view to publication by the end of the year.

The Government also accepted the OFT's advice that consumers should be encouraged to negotiate lower fares in the market, and  advice on this will form part of the best practice guidance for local authorities.  However, the guidance will make clear that initiatives in this regard should not jeopardise safety or lead to enforcement issues.

Transport Minister Tony McNulty said: "During the summer, we hope to consult on best practice licensing guidance, which will include model taxi and private hire vehicle policies for the next round of Local Transport Plans, with a view to publication by the end of the year. These developments, together with a review in three years' time of those authorities that still restrict taxi licences, should lead to more streamlined and improved taxi and private hire vehicle services for the benefit of all."

Scotland
Meanwhile, the Scottish Executive has emphatically rejected the OFT's recommendation to remove quantity controls north of the border.  Minister for Finance and Public Services Andy Kerr said: "We do not consider that the evidence contained in the OFT's Report makes a sufficiently robust case to justify the removal of local authorities' powers to restrict the number of taxis in their area. Case studies indicate that the quality of service can fall when quantity controls are removed.  We also believe that removing quantity controls would not necessarily improve the availability of taxis to the public. Consequently, we continue to take the view that local authorities are best placed to determine whether quantity controls are in the best interests of the travelling public."

However, the Minister said that the frequency and nature of the surveys used by local authorities to assess unmet demand needed to be examined.

The Minister also noted that the OFT's recommendation that licensing authorities should only set maximum tariffs and not fixed fares was already reflected in the Scottish legislation, and that consumers should be made aware of the position in the regard.  However, he rejected the OFT's call to encourage price competition, noting that this could have an adverse impact on public order or create enforcement difficulties.

But Mr Kerr also said that the Scottish Executive concurred with the OFT's recommendation in relation to best practice guidance on quality and safety regulation, and had already started liaising with the Department for Transport in this regard.

Response
The OFT welcomed the Government's "strong encouragement" to local authorities to lift quantity restrictions "as soon as possible".  It said: "The supply of good quality taxi services should be free to respond to what people want, not restricted by regulation. The evidence clearly shows that the public is better served in unrestricted areas."

Trade representative group the Transport and General Workers' Union said that it was good that Government ministers had listened to the "articulate and well informed" voice of taxi drivers.  T&G Deputy General Secretary Jack Dromey said: "The taxi drivers and the T&G feel vindicated today. We said deregulation has not delivered for the bus industry and there was no evidence to suggest it would for local taxi services. Our members locally will now work to make sure the national campaign's success is translated into action."

However, Mr Dromey voiced concern at the Government's response to the OFT's recommendation for greater price competition in the market.  He said that the prospect of drivers haggling on fares levels on Saturday night with angry crowds was not a prospect to be relished, and called for clarity on the subject from ministers.

Links

Government press notice

Government's response to OFT

Scottish Executive press notice

Scottish Executive's response to OFT

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