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Chapter 4 - Fees For Licences
Button on Taxis: Licensing Law and Practice, 3rd Edition
This is a chapter from the Bloomsbury Professional book Button on Taxis: Licensing Law and Practice, 3rd Edition, which is a clear explanation of the law and procedure relating to the licensing of hackney carriages and private hire vehicles both inside and outside London. It also highlights the overlaps and conflicts that exits and provides invaluable analysis and commentary. Furthermore, it includes coverage on how to appeal against decisions, fees and the impact of criminal convictions, additional procedural flowcharts and exhaustive coverage of case law by means of summaries and discussion. It is an essential resource for all local agencies involved in the regulation of taxis.
Fees for licences
Outside London
4.1 Each of the licences outlined in chapter 1 – hackney carriage drivers' and hackney carriage proprietors' (vehicle) licences, private hire operators' licences, private hire drivers and private hire vehicle licences – attracts a fee payable to the local authority.
4.2 As the Local Government (Miscellaneous Provisions) Act 1976 (LG(MP)A 1976) has been adopted by all but one local authority in England and Wales, consideration will not be given in this chapter to the situation with regard to fees that applies where LG(MP)A 1976 has not been adopted. Details of this can be found in the first edition of this work.
4.3 Under LG(MP)A 1976, the provisions controlling the levying of these fees are:
LG(MP)A 1976, s 53(2), in respect of drivers' licences for both hackney carriages or private hire vehicles; and
LG(MP)A 1976, s 70 for hackney carriage proprietors' licences, private hire vehicle licences and private hire operators' licences.
R v Manchester City Council, ex p King
4.4 The provisions of LG(MP)A 1976 do not allow the authority discretion to charge whatever it likes for the grant of a licence. The cost of a licence has to be related to the cost of the licensing scheme itself. That is apparent from the wording used, as will be seen below, but the question of the level of fee is also governed by the decision in the case of R v Manchester City Council, ex p King[1]. Although this was a case concerning the street trading provisions of the Local Government (Miscellaneous Provisions) Act 1982 (LG(MP)A 1982), the judgment has relevance to all local authority licensing fees.
4.5 In the King case[2], Manchester City Council argued that the wording of LG(MP)A 1982 allowed them to set fees for street trading licences that reflected the commercial nature of the sites on which traders traded and that they did not have to be related to the cost of the street trading licensing and registration scheme. The High Court disagreed. Roch J stated (at 709):
'... it would be surprising if Parliament had intended to include a general revenue-raising provision in a schedule which deals solely with street trading. The purpose of that part of the Act is to establish a general scheme for street trading which local authorities may adopt if they so desire ...
The fees charged, in my judgment, must be related to the street trading scheme operated by the district council and the costs of operating that scheme. The district council may charge such fees as they reasonably consider will cover the total cost of operating the street trading scheme or such lesser part of the cost of operating the street trading scheme as they consider reasonable. One consequence of the wording used is that, if the fees levied in the event exceed the cost of operating the scheme, the original decision will remain valid provided it can be said that the district council reasonably considered such fees would be required to meet the total cost of operating the scheme.'
4.6 This decision must now be contrasted with the decision in R (on the application of Davies) v Crawley Borough Council[3], where the Divisional Court allowed a local authority to set a street trading fee by reference to other fees levied both within the borough for market stalls and by neighbouring authorities for street trading consents and licences. It remains to be seen which approach will finally be approved if and when this matter comes before the Court of Appeal[4].
4.7 As the wording in LG(MP)A 1976 is more specific than that in LG(MP)A 1982 (for street trading) this may not seem particularly relevant, but it both cases are important in relation to the concept of a licensing regime. The licence fees in relation to hackney carriage and private hire licensing must be related to the costs of the regime as specified in both LG(MP)A 1976 and the Transport Act 1981.
Driver's licence fees
4.8 LG(MP)A 1976, s 53(2) states:
'53–(2) Notwithstanding the provisions of the Act of 1847 [Town Police Clauses Act 1847], a district council may demand and recover for the grant to any person of a licence to drive a hackney carriage, or a private hire vehicle, as the case may be, such a fee as they consider reasonable with a view to recovering the costs of issue and administration and may remit the whole or part of the fee in respect of a private hire vehicle in any case in which they think it appropriate to do so.'
It is clear that the fees for drivers' licences for both hackney carriages or private hire vehicles, when covered by these provisions, have to be both reasonable and imposed 'with a view to recovering the costs of issue and administration'. This will cover the costs of assessing the suitability of the applicant, including a police check and driving and knowledge tests. It will also include the costs of the issue of the badge and other associated administrative tasks. However, no provision can be made for the costs of enforcement undertaken by the authority against unlicensed drivers, unless that can legitimately be included in the term 'administration'. This would appear to be pushing the accepted meaning of 'administration' a little too far, although there seems to be no case law on this point. This certainly appears to be the case when s 53 is compared with s 70, which specifically refers to 'control and supervision'
Vehicle and operators' licences
4.9 In relation to the fees for both hackney carriage and private hire vehicle licences and private hire operators' licences, LG(MP)A 1976, s 70 states:
'Fees for vehicle and operators' licences
70–(1) Subject to the provisions of subsection (2) of this section, a district council may charge such fees for the grant of vehicle and operators' licences as may be resolved by them from time to time and as may be sufficient in the aggregate to cover in whole or in part—
(a) the reasonable cost of the carrying out by or on behalf of the district council of inspections of hackney carriages and private hire vehicles for the purpose of determining whether any such licence should be granted or renewed;
(b) the reasonable cost of providing hackney carriage stands; and
(c) any reasonable administrative or other costs in connection with the foregoing and with the control and supervision of hackney carriages and private hire vehicles.
(2) The fees chargeable under this section shall not exceed—
(a) for the grant of a vehicle licence in respect of a hackney carriage, twenty-five pounds;
(b) for the grant of a vehicle licence in respect of a private hire vehicle, twenty-five pounds; and
(c) for the grant of an operator's licence, twenty-five pounds per annum;
or, in any such case, such other sums as a district council may, subject to the following provisions of this section, from time to time determine.
(3)
(a) If a district council determine that the maximum fees specified in subsection (2) of this section should be varied they shall publish in at least one local newspaper circulating in the district a notice setting out the variation proposed, drawing attention to the provisions of paragraph (b) of this subsection and specifying the period, which shall not be less than twenty-eight days from the date of the first publication of the notice, within which and the manner in which objections to the variation can be made.
(b) A copy of the notice referred to in paragraph (a) of this subsection shall for the period of twenty-eight days from the date of the first publication thereof be deposited at the offices of the council which published the notice and shall at all reasonable hours be open to public inspection without payment.
(4) If no objection to a variation is duly made within the period specified in the notice referred to in subsection (3) of this section, or if all objections so made are withdrawn, the variation shall come into operation on the date of the expiration of the period specified in the notice or the date of withdrawal of the objection or, if more than one, of the last objection, whichever date is the later.
(5) If objection is duly made as aforesaid and is not withdrawn, the district council shall set a further date, not later than two months after the first specified date, on which the variation shall come into force with or without modification as decided by the district council after consideration of the objections.
(6) A district council may remit the whole or part of any fee chargeable in pursuance of this section for the grant of a licence under section 48 or 55 of this Act in any case in which they think it appropriate to do so.'
Kelly v Liverpool City Council
4.10 What can be recovered via the licence fee under LG(MP)A 1976, s 70? The case of Kelly v Liverpool City Council[5] raised the question of whether a district council could charge for the inspections of vehicles which were submitted for acceptance as either hackney carriages or private hire vehicles, but refused a licence. Liverpool City Council lost at first instance in the Divisional Court, and appealed to the Court of Appeal. The argument centred around the wording in s 70(1) 'a district council may charge such fees for the grant ...' The point raised was that if the vehicle failed the test, there was no grant of a licence and therefore no power to charge a fee. Judgment was given by Schiemann LJ. Having outlined the background to the licensing regime, he stated (at para 4):
'4. The 1976 Act [LG(MP)A 1976] in terms, and the 1847 Act [Town Police Clauses Act 1847] arguably by implication, obliges councils to inspect the vehicle which it is sought to licence. The inspection process costs money. Parliament has authorised authorities to charge fees so that they may reimburse themselves this cost.'
He continued (at para 7):
'7. The Judge decided that Councils could only charge those to whom they granted licences. The authority contend that they are empowered to charge all those whose vehicles they inspect whether or not a licence is eventually granted. The authority point out that a consequence of the judge's decision is that the cost of inspecting vehicles which should not have been submitted for testing falls upon those who ensure that their vehicles are up to scratch before they submit them for testing.'
4.11 The judgment considered a number of different factors. First, the question was 'is it lawful to charge those to whom no licence is granted?' which was considered as follows[6] (at para 9ff):
'9. The judge considered that it was not lawful to charge those who had not been granted licences. His reasoning was simple and understandable. He rightly said that the section provided for the charging of fees "for the grant of ... vehicle licences". He was of the view that it followed that if no licence was granted no fees could be charged.
10. Mr Fraser [for Liverpool City Council] submitted that the provision that the council may charge "for the grant" of licences merely meant that any fees charged must arise out of functions properly associated with the function of granting a licence and that inspection for the purposes of ascertaining whether to grant a licence was fundamental to this function.
11. He submitted that the phrase was ambiguous. It could be limited in the way that the judge had held but it was also capable of bearing the interpretation which he submitted was the correct one.
12. We agree. The phrase is ambiguous and can bear either meaning. ...
15. At first it seems odd that an unsuccessful applicant for a licence should need to bear a proportion of the costs of providing hackney carriage stands of which he will not have any need if he is refused a licence. However, there are a number of answers to this point. The first is that it only runs in relation to hackney carriages and not in relation to private hire vehicles and yet the answer to the question must be the same for both. The second is that it is not an unavoidable consequence of the wording of the section that all applicants must bear the cost of providing hackney carriage stands. It seems to us possible to charge applicants for a licence the costs of inspecting their vehicle and administrative costs involved in determining whether the licences should be granted or renewed without charging them the costs of providing hackney carriage stands. Apart from anything else subsection (6) gives the utmost flexibility ...
17. We have been persuaded that the judge was wrong in the view which he apparently held that it was wrong to charge fees to those applicants whose vehicles did not pass the test and were thus not granted a licence first time. His conclusion involves the proposition that either the Council or those who present first class vehicles for licensing must pay for the inspection costs of those who repeatedly present substandard vehicles. We cannot believe that this was intended by parliament.'
The second question addressed was 'is it lawful to charge the costs of inspection separately from other costs?' This arose because Liverpool City Council, in common with many other councils had a policy of charging £30 for the first test, then an additional £25 for each and every subsequent test if the initial test was failed.
This was answered simply (at para 19):
'We see nothing wrong in what we are told is the widespread practice of authorities, namely, to charge for each inspection at the time that it is carried out.'
The third question raised was 'what impact do the maximum fee provisions contained in s 70(2) have on inspection charges?'. The court decided (at para 20):
'20. The broad policy of the charging section is clear. The fees charged for the grant of licences are not to be used as a revenue raising measure. On the other hand authorities are entitled to charge sums sufficient to cover the costs of doing the things set out in subsection [70](1). ...
25. Subsection [70](2) itself sets out a maximum in respect of each of the three types of licence there set out. However it expressly provides that "in any such case" (e.g. in the case of a vehicle licence in respect of a hackney carriage) the fees chargeable shall not exceed "such other sums as the district council may determine". The words "in any such case" indicate that, for the purposes of construing the rest of the subsection, one must proceed case by case.
26. The plural "sums" is in our judgment significant. We accept that the plural could have been inserted merely to justify a second increase after a first increase. However it was not necessary to use the plural for that purpose. Even had the singular been used the Council would have been able to substitute a new maximum as they "from time to time determine". See also in this context section 12 of the Interpretation Act 1978.
27. In our judgment the plural entitles a district council to specify a maximum sum in respect of the first vehicle inspection, a maximum sum in respect of a second vehicle inspection and a maximum sum in respect of administrative costs and so on, without specifying an overall maximum figure.
28. What is clearly important is that any proposed increase is advertised and considered in the way envisaged in subsections [70](3)–(5).'
In conclusion, the court stated (at para 29):
'29. The Council had a regime which specified that £30 should be paid prior to and in respect of the first test and £25 prior to and in respect of each subsequent test. Once the vehicle had passed the test a further sum of £120 had to be paid for the licence. We see nothing legally objectionable in such a scheme which we understand is similar to that adopted by many other councils.
30. We therefore allow the appeal ...'
4.12 It is clear from this decision that different fees can be levied for hackney carriages, private hire vehicles and private hire operators licences, and that those fees can be levied in stages if there are specific reasons for doing so, as in the Liverpool case[7], the inspection fee, repeat test fee and then the licence cost, covering the costs of administration, enforcement and so on.
4.13 It seems that the following costs can be recovered via the fee under LG(MP)A 1976, s 70. The initial inspection of the vehicle, the cost of providing taxi ranks (referred to in the legislation as hackney carriage stands), and then by virtue of para (c) everything else that is connected with the administration and enforcement of the entire hackney carriage vehicle and private hire vehicle operation. This will include vehicle inspections, administration of vehicle records, random checks, hackney carriage demand surveys etc. The Liverpool decision[8] also means that the fees can be differentiated to enable the costs of hackney carriage stand provision to only be recovered from the hackney carriages that use them.
4.14 The wording of LG(MP)A 1976, s 70(1)(c) clearly envisages the inclusion of the costs of enforcement, and subsequent legal proceedings, as being part of the costs relating to the vehicles themselves. This will cover enforcement of the provisions against both licensed vehicles and unlicensed vehicles. The costs of enforcement for hackney carriages may be different from the enforcement costs in relation to private hire vehicles.
4.15 It is considerably less clear whether the costs of enforcement, in relation to operators' licences, can be included in the fee, as the wording of LG(MP)A 1976, s 70(1)(c) appears to limit the use of that section to the vehicles themselves. Although private hire operators' licences are referred to in s 70(1), nowhere else within the section is there any reference to operators' licences, apart from the standard fee of £25 per year contained in s 70(2)(c).
4.16 The overall effect of the provisions contained within LG(MP)A 1976, in respect of fees for licences, would appear to be, therefore, that, in relation to drivers, the costs of issue and administration can be recovered; in relation to vehicles, the costs of inspection, ranks, control and supervision (including enforcement), and the administration connected with it, can be recovered; and, in relation to operators' licences, it appears that only the costs of administration are recoverable.
4.17 In order to be able to justify a fee levied under either LG(MP)A 1976, s 53 or 70, it will be necessary to be able to differentiate between the two provisions. This will mean that there must be at least two identifiable accounts relating to the fees levied under each section, and if different fees are levied under each section in respect of the different licences covered by the provision, there must be a separate account breakdown for each.
Notice provisions
4.18 Under LG(MP)A 1976, s 53(2)[9] the fee for hackney carriage and driving licences simply has to be reasonable and there are no statutory requirements for advertisements, notices, consultation or representations. In addition, there is no restriction on the number of times that the local authority can increase the fees. However, their actions must be reasonable, in accordance with the Wednesbury principles.
The provisions of s 53(2) can be contrasted with the requirements under LG(MP)A 1976, s 70[10] in relation to:
hackney carriage proprietors' licences;
private hire vehicle licences; and
private hire operators' licences.
4.19 The district council can charge more than the fees laid down in LG(MP)A 1976, s 70(2). If the fees are to be greater, then the following procedure must be followed:
1. A notice must be published in a local newspaper, stating the proposed fees which exceed those laid down in s 70(2).
2. This must specify a date, not less than 28 days from the date on which the notice is first published. That date has two functions:
(a) it is the date by which any objections must be lodged; and
(b) it is the date on which the revised fees will come into effect if either –
(i) no objections are received; or
(ii) any objections received have been withdrawn before that specified date.
3. It must also state where objections should be addressed and how they can be made. Obviously, it is desirable for such objections to be lodged in writing, as opposed to any other method (although an objection by a fax or email should be acceptable).
4. A copy of the notice must be available at the council offices for inspection, free of charge, 'at all reasonable hours' (s 70(3)(b)).
5. Once the objection period (usually 28 days) has expired, if there have been no objections received or those received have subsequently been withdrawn, then the new fees take effect, either at the end of the objection period, or when the last objection is withdrawn (s 70(4)).
6. However, if objections are made and are not withdrawn, then the council must consider the objections.
7. In the light of those objections (although it must consider them, it does not have to vary the proposal as a result of them) the council then sets a second date, which cannot be more than two months after the first date specified, when the new fees come into force (see the flowchart below).
It would appear that a failure to comply with all these requirements would render the fees invalid, and this is reinforced by the remarks of Schiemann LJ in Kelly v Liverpool City Council[11] where, in relation to fees levied under s 70 he stated:
'28. What is clearly important is that any proposed increase is advertised and considered in the way envisaged in subsections [70](3)–(5).'
4.20 Although LG(MP)A 1976, s 53 contains no requirement for consultation, a local authority would be ill-advised not to embark upon some element of consultation with those persons who would be affected by an increase in fees (eg the drivers of both hackney carriages and private hire vehicles).
Although it is not a statutory requirement, it would seem sensible for local authorities to follow the same procedure as contained in LG(MP)A 1976, s 70 for increases in fees under s 53, so as to provide the consultation which is required and to demonstrate that they are approaching the matter in a reasonable fashion.
Fees in general
4.21 It is important to appreciate that a statutory power to levy a fee does not give a local authority an absolutely free hand in relation to the scale of the fee that is levied. The impact of any increase upon the livelihood of those affected has to be taken into account, as does the scale of the increase itself. Consultation must take place with interested parties, whether this is a statutory requirement or not, and results of that consultation must be considered by the local authority before the decision is finally made. It is important that any such consultation is undertaken fairly and that the results are then considered properly by the local authority. Any suggestion that the consultation process is a sham would be grounds for an application for leave to seek a judicial review of the final decision.
4.22 It must also be borne in mind that when Parliament has given a local authority power to raise money to pay for an activity, then that power should not be rejected lightly. The control of hackney carriage and private hire vehicles, and associated drivers and operators, is a time-consuming and costly exercise, and it is quite legitimate for a local authority to recover as much of their costs as they are able to in relation to this. Those involved in the hackney carriage and private hire trades are in a business and it would be difficult to justify an approach whereby a local authority subsidises private enterprise by refusing to recover as much of the costs associated with its statutory duties as it is able to do so. Such a subsidy would be at the expense of the other services the council could provide to its council tax payers, if full cost recovery was undertaken.
This is obviously a matter of politics and, as ever, it will be for the elected members to make the final decision. However, the overriding aim must be to protect the public and, within the statutory mechanisms, to provide an efficient and effective service for all concerned: those involved in the trade, the council itself and those who elect the council and pay for its activities, the council tax payers.
Within London
Hackney carriage vehicles
4.23 Fees are payable to Transport for London (TfL) for licences for both hackney carriage vehicle and hackney carriage drivers licences.
The power to levy a fee for a hackney carriage vehicle licence is contained in the Metropolitan Public Carriage Act 1869, s 6(5) (MPCA 1869). This power is multi-layered, as a fee can be levied on application, for any examinations or tests that may be required, and then, when the licence is finally granted.
4.24 MPCA 1869, s 6(5) states:
'(5) A fee of such amount (if any) as Transport for London may determine shall be paid to Transport for London—
(a) by any applicant for a licence under this section, on making the application for the licence;
(b) by any applicant for the taking or re-taking of any test or examination, or any part of a test or examination, with respect to any matter of fitness, on making the application for the taking or re-taking of the test, examination or part; and
(c) by any person granted a licence under this section, on the grant of the licence.'
4.25 This power is extended by MPCA 1869, s 6(7) and (8) which states:
'(7) Different amounts may be determined under subsection (5) of this section for different purposes or different cases.
(8) Transport for London may remit or refund the whole or part of a fee under subsection (5) of this section.'
4.26 This can be contrasted with the powers contained in LG(MP)A 1976, s 70 in respect of hackney carriage proprietors licences outside London, where there are specified matters that can be taken into account in deciding the fee. MPCA 1869, s 6 gives TfL an absolute discretion in setting the fee, and whether to vary the fee in different cases, and also whether to refund all or part of it.
4.27 The only method of challenge would appear to be judicial review. The grounds would seem to be limited to Wednesbury reasonableness, as in the absence of any limiting factors to take into account in determining the fee, no challenge appears to exist in those areas. TfL must take account of the impact of any increase in the licence fee on the livelihood of the licensees, and must not increase the fees overall by an unreasonable amount (see R v Manchester City Council, ex p King[12]).
Hackney carriage drivers
4.28 Identical provisions exist in respect of hackney carriage drivers' licences. They are contained in MPCA 1869, s 8(8), (10) and (11). As the wording is identical, the same comments apply as outlined above at para 4.23 to 4.27.
Private hire
4.29 The Private Hire Vehicles (London) Act 1998, s 20 provides for fees to be levied on application for a London private hire operators, vehicle or driver's licence. The fees themselves are prescribed by the licensing authority by means of regulations.
London operators
4.30 By virtue of the Private Hire Vehicles (London) (Operators' Licences) Regulations 2000, reg 4[13] as amended by the Private Hire Vehicles (London) (Operators' Licences) (Amendment) Regulations 2003 a fee is payable on application for a grant of an operator's licence. For a variation a fee is also payable. Once the licence is granted, a further fee of is payable. This latter fee covers a period of five years.
4.31 There are no criteria laid down as to how these fees are calculated. Unlike the situation outside London, any fee can be set by Transport for London. Regulations are made by the Secretary of State for Transport, so there would be an opportunity for Parliament to scrutinise any proposed increase, but beyond that, there are no obvious methods of challenge.
London drivers and vehicles
4.32 For drivers, the fees are set by the Private Hire Vehicles (London PHV Driver's Licences) Regulations 2003. The fee on application is £131 and on grant the fee payable is £87. A similar approach is taken for vehicle licence fees within London with the Private Hire Vehicles (London PHV Licences) Regulations 2004 which set an application fee at £75 and the fee on grant as £25. Again, no obvious routes of challenge exist to the level of the fee that may be set.
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[1] (1991) 89 LGR 696, DC.
[2] R v Manchester City Council, ex p King (1991) 89 LGR 696, DC.
[3] [2001] 46 EGCS 178, QBD.
[4] For a discussion and comparison of these two cases, see (2002) 49 Licensing Review 12, April.
[5] [2003] EWCA Civ 197, [2003] 2 All ER 772; see para 4.10 above.
[6] Kelly v Liverpool City Council [2003] EWCA Civ 197, [2003] 2 All ER 772; see para 4.10 above.
[7] Kelly v Liverpool City Council [2003] EWCA Civ 197, [2003] 2 All ER 772; see para 4.10 above.
[8] Kelly v Liverpool City Council [2003] EWCA Civ 197, [2003] 2 All ER 772; see para 4.10 above.
[9] See Appendix I.
[10] See Appendix I.
[11] [2003] EWCA Civ 197, [2003] 2 All ER 772.
[12] (1991) 89 LGR 696, DC; see paras 4.4–4.5 above.
[13] SI 2000/3146.
_________________
Think of how stupid the average person is, and realize half of them are stupider than that.
George Carlin
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