Taxi Driver Online

Glasgow City Council lost more than £250,000 on taxis and private hire licences

GLASGOW City Council made a huge financial loss on taxi and private hire licensing last year. City chiefs lost £272,826 overall in 2016/17 despite making a £188,163 profit the year before. The local authority is weighing up whether to enforce a cap on private hire drivers in Glasgow, with around 3,500 currently in the city and another 177 new licences pending approval.

But Unite the Union, which represents Glasgow’s cabbies, has slammed the local authority, claiming officers are using delaying tactics to avoid an immediate cap. Steven Grant, Unite’s cab section secretary, said: “The union has been calling for a cap since legislation became active in May 2017.

“Glasgow City Council’s licensing department has been stalling, belatedly and somewhat reluctantly putting a report in front of the licensing and regulatory committee on November 15 last year. “The committee agreed to the procurement of an independent survey at that meeting. We found out from (council leader) Susan Aitken that the process is still no further forward.”

Currently, there is a cap on the number of taxi licences for black hackney drivers in Glasgow. But private hire firms such as Uber do not have a limit to the number of drivers they can licence. Glasgow City Council said it was awaiting “legislative guidance” from the Scottish Government before commissioning an independent review into a potential cap on private hire licences.

In emails to Unite, Peter Reid, the Scottish Government’s licensing team leader, said: “It is the intention of the Scottish Government to prepare guidance to support local authorities in this role, and we expect to start work on this shortly. “It would really be a matter for individual local authorities to determine whether and when to undertake any work on the overprovision of private hire cars.”

Despite making a loss last year, a Freedom of Information request to the council found that an overall net profit of £115,572 was made on taxi and private hire licences since 2014.

A spokesman for Glasgow City Council said: “The guiding principle around licensing fees is to try and ensure that income and expenditure are broadly in line. “The number of applications for new licences and licence renewals can vary from one year to the next and so the figures indicate a manageable deficit which may well adjust over the next few years. “Recent changes to legislation will allow us to apply a cap on private hire cars, if that is found to be necessary.

“We are currently tendering for a provider to undertake an independent assessment of the level of demand for taxis and private hire cars in Glasgow. “It would be inappropriate to proceed with the assessment before this legislative guidance is available. “Whether a cap on the number on private hire care numbers is required can only be determined once we have the results of the independent demand assessment. “

Just last week Unite claimed cabbies were being put under extreme stress due to competition, with many forced to work up to 10 hours every day just to earn a living wage. The union said drivers won’t visit their GP to speak about mental health problems amid fears they’ll lose their taxi and private hire licences.

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IDFIMH

There are about 1,400 black cabs, so together just short of 5,000 licensed cars.

How the f*** can a council lose money with that amount of revenue coming in?

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IDFIMH

That passage was used at the weekend in reference to vehicle numbers, in the piece about mental health.

Wondered what "manageable deficit" meant - seemed an odd way to characterise the issue of vehicle numbers.

But now seems "manageable deficit" was actually referring to the departmental budget - certainly makes a lot more sense.

Someone's obviously got their quotes mixed up.

viewtopic.php?f=2&t=32737&hilit=deficit

£273k deficit from £188k surplus the year before, so nearly half million pounds change in one year.

Looks a lot, and there may be one-off factors explaining it.

But combining plate and badge numbers there's probably something like 12,000 licenses in issue.

So the latest deficit equates to something like £23 per licence.

Looking at it like that it seems a lot more reasonable - if they're trying to break even in the long term and revenues and costs are fluctuating then £23 doesn't sound like a huge amount, particularly if there are one-off costs distorting things in the short term.

So to that extent perhaps the council's claim that it's a "manageable deficit" isn't too far-fetched.

Thought they weren't allowed to make a profit from licensing??

Has Scotland changed from one year drivers licenses to 3 year licenses and from 3 year operators licenses to 5 year licenses? If they have it could explain the reduction.

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Grandad,

They have probably applied a good ole British custom in order NOT to show a profit........paid out some nice lucrative bonuses

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if you cannot be yourself, then who can you be.

Problem is that for any accounting period it's probably a minimum of several months before the profit/loss* can be calculated, and of course you can't change the licensing fees for that period after the event, so profits or losses for any period are only to be expected, and councils can only try to smooth it all out over the long term.

Even if licensing fees went up and down like petrol prices it would still be impossible to get it bang on, because the costs won't be known with certainty until months after the relevant fees have been paid.

* Because local authorities aren't commercial operations then the terms surplus/deficit are probably better than profit/ loss, particularly as licensing functions aren't meant to make a profit anyway. Er, I mean surplus.

No change here as far as I'm aware, but as mentioned in another recent thread the default period for licenses is three years, but councils can choose a shorter period:



In Fife one year and three year options have been available for both badges and plates for years, but it seems that in Glasgow only three year options are available, but I'm not sure if that's always been the case.

Incidentally, a taxi or PH operator's licence in Scotland refers to a plate or proprietor's licence. What would be called an operator in England is a booking office (or something similar) up here, and applies to both taxis and PH. But an operator is very definitely a plateholder, and this often causes confusion when Scottish people are reading about what's happening in England, and vice versa.

That kind of thing can certainly affect cash flow, and adds to the difficulties in working out the surplus/deficit from year to year.

But if three/five year licenses are paid in advance then they'll presumably be spread out over the next three/five years for working out the surplus or deficit - that's the difference between accounting for surplus or deficit on the one hand, or cash flow on the other.

If, for example, you start a licensing function from scratch (as per minicabs in London a few years ago) and rake in £9 million in cash from three year licenses, then obviously to work out the surplus/deficit then you won't use the £9 million for the income figure, because it covers the next three years - it would be spread over the three years for accounting purposes. So although it would look like £9 million in terms of cash flow, in accounting terms the income would only be a third of that, ie £3 million.

Same with a driver's accounts if he's paid £600 for a three year licence. For his accounts (and the taxman) the fee would be shown as a cost of £200 over each of the next three years' accounts and tax return.

So just the other side of the council's accounting for income from licensing, really.

Of course, that's not to say that that's how councils do it, or that every council will do the same.

My accountant, for example, used to treat my annual insurance premium as wholly as a cost in the accounting period in which it fell. However, that was strictly speaking just a crude approximation, and later they started spreading it over the two accounting periods that the premium actually covered. (Suspect it was a different person who started doing my tax return, although all the correspondence continues to be signed off by the same partner of the firm.)

Same with three year license fees - my accountant does spread it over the three years, but strictly speaking that is inaccurate as well, because the licensed period isn't the same as my accounting period. My plate starts on 1 October, but my accounting period ends on 30 November, so strictly speaking just two months of the 36 month period should be included for the accounting period in which the licence is paid. (In fact to be absolutely accurate that is incorrect as well, because 2/36 months is an approximation because not all months are the same length.)

But that just illustrates that to a degree accounts are all just approximations, so you'll never achieve 100% accuracy, and it's simply a question of what's considered a reasonable approximation.

I think a council should have a balanced budget over a three year period.

That will allow for the 1/2/3 year license issue, and take into account SUD surveys.

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IDFIMH