For the second time in a few hours, where to start with this?
For a start, this longer-than-normal Taxi Point piece seems to come out of nowhere. You'd think there was a huge debate going on about vehicle caps. But haven't seen anything particularly out of the ordinary, and can't even recall it being mentioned much in the context of the whole cross-border and devolution legislation debate.
Likewise, it initially centres around Scotland, as if there's something always kicking off about it here. Well, of course, there's always the odd thing about trying to impose new PH caps, but other than that...
And I thought that maybe for a change the 'unintended consequences' were to be something other than what's normally stated in stuff like this. But they're not
CAPPING TAXI AND PHV NUMBERS: The unintended consequences of local licensing caps
https://www.taxi-point.co.uk/post/cappi ... nsing-caps
The debate around whether local authorities in England should be granted greater control over private hire vehicle licensing numbers has resurfaced with renewed vigour as the Government’s devolution agenda advances.
Advocates argue that local councils are best placed to determine the transport needs of their communities. Yet the experience of licensing caps in Scotland, combined with the structural complexities of cross-border hire regulation, suggests that the path towards localised numerical limits on private hire vehicles (PHV) is considerably more treacherous than it first appears.
Scotland has long operated within a regulatory framework that permits licensing authorities to impose caps on the number of taxi and private hire vehicle licences they issue. Under the Civic Government (Scotland) Act 1982, Scottish councils retain the power to determine whether the “adequate” provision of taxi services in their area is already being met and, if so, to refuse further licences on grounds of surplus. Several Scottish authorities have deployed this provision to freeze or limit the growth of their local taxi and PHV fleets. The consequences, whilst arguably well-intentioned, have been decidedly mixed. In areas where caps have been applied rigidly, waiting times have increased during peak periods and accessibility for passengers in off-peak hours and rural fringe zones has demonstrably worsened.
Crucially, the caps have not prevented demand from being met, they have simply displaced it, with passengers turning to unregulated or out-of-area operators who face no local scrutiny whatsoever.
- Devolution ambitions and Scotland’s cautionary tale raise serious questions about whether giving English councils new taxi licensing powers would create more problems than they solve
That displacement effect is arguably the most damaging unintended consequence of any licensing cap, and it is one that English policymakers would be wise to examine closely before granting local authorities comparable powers through any devolved legislative framework. The English system operates under the Local Government (Miscellaneous Provisions) Act 1976 and, unlike Scotland, contains no general mechanism for councils to cap PHV numbers on grounds of oversupply.
A licence must be granted if the applicant meets the relevant conditions. Should the Devolution Bill, as it continues its passage and evolves in scope, empower metropolitan mayors or district councils to introduce numerical caps at will, the regulatory geography of England would fragment in ways that the existing cross-border hire framework is wholly ill-equipped to manage.
Cross-border hire in England and Wales is already one of the most legally contested areas of taxi and PHV regulation. The fundamental principle is that a vehicle licensed by one authority may legally collect passengers from the area of another authority, provided both the driver and vehicle hold a valid licence from the same licensing body. This arrangement has allowed large operators to licence their fleets in authorities perceived as having lighter-touch regulatory regimes, whilst operating commercially across major cities. It is a system that has attracted fierce criticism from many licensing authorities, particularly those that have invested heavily in stricter local standards, only to find their streets filled with vehicles licensed elsewhere and subject to different, sometimes lower, requirements.
Introduce a patchwork of numerical caps across English councils and the cross-border hire dynamic does not disappear; it accelerates and mutates. An authority imposing a cap of, for example, 2,000 PHV licences within its boundaries would find that limitation entirely circumvented by operators licensing additional vehicles in a neighbouring uncapped authority and deploying them freely within the capped area.
For any cap to function as its architects intend, it would need to be accompanied by fundamental reform of the cross-border hire framework, requiring that vehicles can only operate within the licensing authority’s area, or within a formally agreed regional zone. Such a reform would represent a seismic shift in how private hire regulation functions in England and would demand primary legislation, not merely devolved powers handed to local councils. It would also likely face sustained legal challenge from the major app-based operators whose entire commercial model depends on the flexibility of licences across authority boundaries.
Transport for London (TfL) has historically been one of the most prominent voices in discussions about PHV numbers and their consequences for the capital. TaxiPoint has reported extensively on TfL’s position, which has consistently stopped short of calling for an outright numerical cap on PHV licences whilst simultaneously acknowledging the operational challenges posed by rapid fleet growth.
TfL has noted publicly that between 2013 and 2016, the number of licensed PHVs in London roughly doubled to over 87,000, placing significant strain on road capacity, driver income, and the financial viability of the licensed taxi trade. Yet TfL’s stated approach has been to focus on conditions rather than numbers: tightening English language requirements and introducing stricter vehicle emissions standards.
In evidence submitted to various Greater London Authority transport committee hearings, TfL representatives have maintained that the legal framework as it stands does not provide the regulator with the power to refuse a PHV licence on grounds of oversupply alone, and that introducing such a power without accompanying cross-border reform would be legally incoherent. TfL has also pointed to the risk that any cap introduced in London would simply displace drivers into adjoining authorities such as those in Surrey, Essex, or Hertfordshire, from where they would continue to serve London passengers under the existing cross-border rules, rendering the cap operationally meaningless.
This analysis sits at the heart of why localised licensing caps, however politically attractive to councils facing congestion pressure or vocal taxi trade lobbying, risk producing outcomes that are the precise opposite of those intended. A cap without cross-border reform protects nobody. It does not reduce the number of vehicles on the road, does not improve working conditions for drivers, and does not meaningfully enhance passenger safety or service quality. What it does do is create market distortions, push licensing activity into less regulated neighbouring authorities, and potentially leave passengers in capped areas facing longer waits and reduced choice, particularly outside of peak hours and in areas less well served by aggregator platforms.
If devolution of licensing powers is to proceed in any meaningful form, the Government would need to confront the cross-border hire question directly and simultaneously.
One model that has been discussed, would be to move towards a system of regional licensing zones, potentially aligned with combined authority boundaries, within which any licence-holder could operate but outside of which they would have no automatic right to pick up. This would at least provide a coherent geographic framework within which numerical or conditional limits could be applied and enforced. However, it would require the cooperation of multiple licensing authorities, the agreement of operators, and fresh primary legislation to displace the existing 1976 Act provisions.
It is not a quick fix, and it is not something that devolution legislation alone could deliver by handing councils a new power to say no.
English local authorities looking enviously at the Scottish model should ask first whether they have the tools to enforce it, and whether, in the absence of those tools, the cure might prove considerably worse than the condition it is meant to treat.
