Taxi Driver Online

Nobody wins when there are too few taxis

There are good arguments for regulating taxis. We are especially vulnerable when we jump into someone else's car; we warn children sternly against it. We frequently use taxis where we do not know the geography and have no previous experience to tell us what is a reasonable price.

But if regulation is introduced, usually to protect vulnerable consumers, there is always pressure to extend its scope. Regulation creeps. Rules to exclude criminals and prevent fare-gouging are necessary. But limits on the number of taxis allowed to ply for hire are not. The Office of Fair Trading has just completed a review of this practice and its conclusion is that taxis are neither better nor safer because there are fewer of them. They are just more expensive, and harder to find. The dearth of closely regulated taxis is partly met by the emergence of less closely regulated private hire vehicles: fine if you are a local resident and have made plans in advance, less satisfactory for tourists or those who want to flag down a taxi in the street - or a business seeking to offer a readily available, high-quality taxi service.

About half the taxi licensing authorities in Britain limit numbers and almost all of them have long waiting lists. Similar restrictions are common around the world. In New York, the number of licensed cabs has remained almost unchanged, at about 12,000, since the first controls were imposed more than 60 years ago. The main reason these restrictions exist is that taxi drivers are organised to lobby for them but passengers are not organised to lobby against. The bane of a cab driver's life is time spent driving an empty vehicle. If supply were better adjusted to demand, he thinks, the meter would always be turning and there would always be an audience for his opinions on the state of the world.

Yet the effect of quantity limits is not as simple as the cabbie thinks. When licences are restricted, they acquire value. The medallion required to operate a New York yellow cab changes hands for about $250,000 (£136,000). In Britain, trade is frowned on but nevertheless widespread. It is said that Calderdale in Yorkshire has Britain's most expensive taxi licences; and if you want to drive a cab in Crawley or Wycombe you may have to invest up to £50,000.

The potential profit a taxi driver might derive from restrictive licensing through higher fares and fuller cabs is absorbed in the costs of servicing the loan needed to acquire the licence. Today's taxi drivers are no better off than if restrictions on numbers of cabs had never been introduced. And the value of the licence is a measure of the amount by which their passengers are worse off. If drivers did not have to pay this levy, there could be lower fares and better services.

If drivers do not gain, and passengers lose, who does benefit from quantity licensing? The gains go to the people who were in the business when the restrictions were introduced, or started to bite. As demand for New York cabs increased, but supply did not, the value of a medallion increased steadily. A New York owner driver who began work after the second world war and retired in the 1990s could have derived a retirement income simply from his accumulated capital gains. But now he has spent the money, and it would be neither fair nor practicable to recover it from him. The New York City cab trade cannot now be deregulated because to do so would wipe out the savings of owner drivers and the investments of people who lease medallions. At first sight, phasing out of regulation might seem a way ahead. But who would want to buy an asset certain to depreciate? The outcome might be little increase in supply but large losses to incumbent operators.

In Dublin, where rapid growth had led to acute shortages of taxis, the ingenious solution was to give new licences to established operators to sell to new entrants. This moderates the problem but still does not eliminate it.

Most bad economic policies can be abandoned. The pernicious nature of restrictive licensing systems is that their malign effects are irreversible. This has earned for such schemes the label of the "transitional gains trap". Governments and licensing authorities should think twice, and better, before they introduce such policies.

_________________
IDFIMH

And remember that increasing numbers doesn't guarentee a better service during the peak times.

Taxis are available in most areas at any time of day immediatly, its just a walk from where the punter is to where the councils designate space, so they argue they can't get a cab, the real answer is more likely that they made NO EFFORT to find one and expected there to be one where they wanted one, fine and dandy driving around the streets of London looking for hands but no good driving up and down the single street that is Gateshead High Street. Particularly when there are another 80 to 100 blokes doing the same.

The general public presume that taxi drivers earn a fortune, they base this on the fact that it would only cost them a couple of quid to drive their own car home and the taxi driver charges them a tenner. Oh aye and it only takes 15 minutes to get there, so he's made a profit of £8 and because I waited 20 minutes for hime he must do this from the time he leaves the house until he goes home so he's got to be clearing at least £32 an hour.

We all know that isn't the case, yet we still believe ill-informed journalists who write this drivel.

That whole article is nonsence, written from the pages of a nonsence OFT report. What was the authors name Andy, I feel compelled to offer FT readers the real truth.

B. Lucky

Mick,
Reading you as I have for a long time I understand your frustrations but you dont half talk double sided.

last week you advocated policy to the locality.

where I am taxis are so rare, that most public jobs are done by private hire.

Gateshead is just about the worst place I have heard of, if you moved in with your auntie in Brighouse you would earn a packet, there are 3 firms there 2 owned by one person, his white outfit Charlie woods would take you tomorow.

make your mind up b4 April when tests are introduced.

I know you dont wanna work with me, but I also will set you on.

give up Gatehead its destroying your soul.

[quote="Anonymous"]give up Gatehead its destroying your soul.[/quote]

Actually I'm giving up on the trade all together.

The laws governing it are antiquated to the point that none can be enforced without someone screaming "foul" and threatening to take court action.

When I first started there was a certain ammount of unity, un-written rules were adhered to and whether you liked someone personally or not if you saw him in bother you stopped to lend a hand.

I'm a dinosaur when it comes to ideals connected to this trade, a traditionalist if you like, and I can't bear to see it become a part time money spinner for those earning a living elsewhere or those with emerald eyes of envy cast on those who haven't got what others have.

I know I get exited, I know sometimes I lose the plot a bit, but thats only because I give a [edited by admin], others that don't now out number people like me and maybe now its their time, I don't think I could adopt that kind of attitude to this trade which I once saw as a decent profession.

B. Lucky :twisted:

all good enough points, but regarding fares this guys way off, cant see a fare decrease going through at our next AGM somehow!

Captain,
look at the fares of the seventies when vehicles were more costly pro rata
inflation it and you will see a favourable position.

if our costs reduce so will fares in the long run.

watch out for congestion charge nationwide, and fuel tax comming off onto the charge.

that will put us on par with buses, as we dont pay congestion charge.

guest,

the costs of operating a cab may reduce long term, but will the cost of living?, if your a driver and not responsible for the running costs of the cab your more interested in your morgage, council tax, price of bread.

The savings suggested dont really take account of the driver.

regards

captain cab

Even if the OFt report is favoured by the goverment it will take 10 years to impliment anyway. That will see me out I think.

Could be, or could be not.

I feel the DDA make take up to 10 years, but I really doubt the OFT will.

The problem is how they will assess demand in the meantime.

As someone said a while ago, I don't think there is a realistic middle ground.

So it's going to be all or nothing, in my very very honest opinion.

_________________
IDFIMH

there is a hell of a difference between leglative instruction and council decision.

it wont take Mansfield council 10 years, as councils fall the others will fall in.

give you an example all the councils around us had driver tests, so all the failures came here where they had none.

guess what we are having stiffer tests than the rest.

the midland mafia are being stopped in thier tracks.

In a letter form the Department for transport dated 23/10/03.

The OFT is carrying out a study into UK taxi services. I understand that they currently expect to publish this st the end of the month, consequently, if ministers were to decide to reform this law "in some way" as a result of their considerations or through accepting OFT recommendations, I would stress that it would be some 10 years before a change could be implemented. In the mean time the status quo would prevail, ie councils which restrict the issue of taxi licences would be expected to carry out unmet demand surveys in accordance with existing and still current laws.

There you go boys good aint it???????

You could well be right Nidge.

Recent experience of taxi legislation:

1985 Dereg Act. Created PSV loophole.

Took Government untill July 2001 to relegislate to close loophole. And then, Section 265 only stopped the small firms from doing it, and still allows the big boys to carry on as usual.

While I wish Andy's "Not Long Now" actually mant something, I still think it will be changes of Council heart that will set the future rather than any new legislation that helps us.

I used to be a cynic, but now I am just apathetic. We will just carry on working within whatever legislation they throw at us.

_________________
There is Significant Unmet Demand for my Opinion.

I will bet anyone anything, that if the ministers (note the plural, I doubt the T&G have much sway in the DTI) decide that OFT will happen, then it will happen very soon.

If not then how will a council defend any survey costs, in the meantime?

And if you don't have surveys, you don't have restrictions.

_________________
IDFIMH

Did I state the T&G Andy?? I bet it takes 10 years minimum before it even gets a listening in the house of commons, the goverment have better things to discuss. It will be put on the shelf you mark my words.

No you most certainly didn't Nigel, but I did.

My point, was that OFT is not all down to those in the DfT, but to those in the DTI.

_________________
IDFIMH