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PostPosted: Sat Feb 26, 2005 11:44 am 
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The myth and reality document was a well put together piece, it is obvious from reading it that the authors are pro delimitation.

For those of you who read my posts, you will be aware that I prefer to sit on the fence, coming off the fence when I feel the need. This has been a confusing polciy to some, however, as I've stated before, in my view justification is of prime importance in any LA policy.

I wish to disect the myth and reality document in this thread, you are welcome to make your comments known, however, I ask the moderators to delete all posts which go off topic.

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Captain cab

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PostPosted: Sat Feb 26, 2005 12:01 pm 
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The Introduction;

Quote:
While the OFT’s report did not use the term ‘cartel’, these restricted numbers policies are essentially legal agreements between local authorities and local taxi license holders to restrict entry to the trade, and thus might reasonably be described as statutory cartels. Indeed, while Mr Vickers’ statement above refers to cartels operated dishonestly, a not unreasonable description of these taxi cartels might be as tantamount to institutional theft. A couple of examples from the UK taxi trade might lend some weight to this analysis:


I find the opening statement slightly confusing and perhaps misleading.

Restricted numbers policies are not essentially legal agreements, they are the policy of a local authority which has been elected democratically by the electorate.

Mr Vickers statement, if it was referring to the restricted numbers policy of local authorities is inaccurate.

Cartel;

an association of business firms to coordinate production, prices etc to avoid competition and maximize profits

A cartel therefore fixes prices, as you all know the local authority sets taxi fares.

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PostPosted: Sat Feb 26, 2005 12:25 pm 
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1, An individual is granted a taxi license (plate) at nominal cost in an area with restricted numbers. This plate can be rented out to working taxi drivers for perhaps £100 per week (say) for as long as the restricted numbers policy is in place and the license thus has a ‘scarcity value’. The license holder need not drive a taxi or even have worked in the trade – there are even cases of such plate holders living abroad. The working drivers may have been waiting many years for the grant of a plate;

2, An individual is granted a taxi plate at nominal cost in an area with restricted numbers. This ‘free’ plate can be sold on almost immediately for £40,000 (say), thus immediately cashing in on the scarcity value. Once again, the successful recipient may have never even driven a taxi. The payment is made by someone who cannot get a ‘free’ license because of the quantity controls in operation.


In response to point one. It does go without saying that this is not only the case in restricted areas, in delimited areas people purchase vehicles, license them and then rent them out to drivers, these people need not necessarily be taxi drivers or even connected with the profession other than have their names on the license.

The point is therefore slightly misleading, as in delimited areas there is no 'scarcity value'.

The location of the owner is of what relevance? Surely the important issue is that the license is being worked.

In response to point two. It is almost contridictory, I presume that the authors refer to those local authorities whom issue a limited number of licenses per year.

The points raised regarding the potential to sell a plate immediatly upon license are correct. However, one would presume that the local authority would be aware of this and have in place a policy attached preventing such an occurance.

Indeed, it my well be worth scrapping the waiting list system in favour of a lottery in such areas.

It is worrying that the most obvious way to obtain a license in a restricted area i.e. by purchasing one, has not been mentioned. Obviously the most worrying aspect to the trade in a limited area is to still be paying for a plate if delimitation occurs.

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PostPosted: Sat Feb 26, 2005 12:32 pm 
The problem I have with the document is that it claims to be written by taxidrivers on behalf of the taxi trade.

It is clearly written with bias toward derestriction, and as we are all well aware derestriction is something even a majority cannot agree upon, therefore the claims of the whole piece have got to be questioned as it is founded upon the authors opinion which is not shared by a majority within the trade.

I do believeand agree it is a well written informative piece, however due to the concerns expressed above, I would have to say that it presents one side of an argument but claims to represent both sides.

This is synonomous throughout discussion within the site itself.

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PostPosted: Sat Feb 26, 2005 12:39 pm 
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We are not suggesting that such cases are the norm. Indeed, it seems probable that most UK taxi plate holders do actually drive a taxi. However, while the cases above represent extreme examples, the basic principle remains the same in every local authority with restricted taxi numbers – each license has been issued by an arm of government at nominal cost to the recipient, but the ‘excess profits’ earned by current license holders is represented by the value of the plate – in Manchester, for example, this amounted to a collective value approaching £40 million prior to the OFT’s report.


This is a scurrilous statement to some within the trade.

It is fair to presume in a significant number of areas plates are no longer in the possession of the original licensees, this may date back a considerable period. It is equally fair to presume that the current licensee has paid a considerable sum of money for the license. This is obviously not the fault of the new licensee who will obviously have to repay the money often borrowed for the license.

It is difficult to understand the meaning of the excess profits to which the document refers. A taxicab is only able to earn a certain amount of money in any shift, it is often limited time itself.

Is it not therefore fair to equally presume that the monies paid for the license are to guarantee a set standard of income.

The value of plates in Manchester or indeed in any limited area are of little consequence to the service provided, if the service is poor or an unmet demand is found, then a local authority may issue further licenses.

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PostPosted: Sat Feb 26, 2005 12:45 pm 
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Quote:
The problem I have with the document is that it claims to be written by taxidrivers on behalf of the taxi trade.


lol GA the bit I'm reading says it was prepared by working drivers, it does not state taxi or private hire.

however, I am making points for discussion, and I think the people behind the document need congratulated.

It is a well constructed document which is intelligently put together.

Captain cab

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PostPosted: Sat Feb 26, 2005 1:12 pm 
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Quote:
NUMERICAL EFFECTS


I fail to see the points being made in respects to an improved service to the customer. Therefore is the numerical argument relevent to either pro delimiters or pro limiters arguments? The customer is not particularly bothered who owns the vehicle, they want to get from A to B as efficiently as possible.

Quote:
However, a simple three-stage hypothetical example demonstrates the often grossly misleading nature of any analysis of bare taxi numbers:

1, A town has 100 taxis driven by 200 drivers, with each taxi driven by one driver during the day and one driver at night.
The town de-restricts taxi numbers and each driver takes the opportunity to run his own vehicle. The number of taxis thus doubles to 200.

2, Shocked by the huge increase in the number of vehicles, the town’s licensing authority decides to re-restrict taxi numbers.

3, The town depends on one major employer, and this firm closes down, making thousands unemployed. Consequently, each of the town’s 200 taxi owners manages to recruit another driver.


Again, I fail to see the relevance, has part three been added to be a happy ending for the taxi trade? :wink:

It has been generally agreed that the majority of new licensees will switch from private hire to hackney carriage, if vehicle standards are in place, then this may not be as catastrophic as suggested by some elements of the HC trade, indeed, it would be astonishing if the former private hire drivers became hackney and removed their PH radio systems.

What the document is basically saying is the total number of licensed vehicles will not dramatically change and following from this, if numbers dont change, then job wise there is no difference. Which is true on the face of it.

However, the document fails to take into account human nature which is surely of equal relevence, for every action there is a reaction.

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PostPosted: Sat Feb 26, 2005 1:20 pm 
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Quote:
Empirically, this phenomenon can be examined by comparing taxi numbers in London and New York. Most conventional analyses would compare the 20,000 or so taxis in London with the 12,000 or so in New York. However, while there are around 24,000 London drivers, numbers in New York are significantly higher at 40,000 – while each London taxi is driven by just over one driver on average, over three are packed into each New York taxi.

In the purely domestic context the effect can be further demonstrated by comparing the driver/vehicle ratio in London, where drivers can choose to operate their own vehicle, with several of the more high profile restricted areas in the UK, together with one or two other locations:


I dont honestly believe the document is doing itself any favours by referring to a comparison between New York and London. The T&G have made similar references to the taxi wars in Atalanta, Georgia and have been rightfully castigated for doing so.

It is generally well known that New York is a heavily congested city, surely the reasons that taxi numbers are not similar to London are for the reasons of the congestion and not as suggested by the document.

Indeed, an additional argument could be that vehicles in New York are better managed than in London, given the congestion in our capital, New York maybe an ideal example to follow :wink:

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PostPosted: Sat Feb 26, 2005 1:31 pm 
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Gateshead Angel wrote:
The problem I have with the document is that it claims to be written by taxidrivers on behalf of the taxi trade.

Where does it say that then? :?

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PostPosted: Sat Feb 26, 2005 1:32 pm 
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Quote:
Taxi/PH substitutability

The other primary numerical consequence of restricting taxi numbers is to fuel growth in the PHV sector, which cannot be numerically controlled. Although the latter cannot ply for hire on the streets in the manner of taxis, they can pick up passengers who have pre-booked (primarily by telephone). Of course, taxis can operate via both methods of securing custom, but many confine themselves to the rank and hail markets. Thus if two otherwise identical locations are considered, it might be expected that if one restricted taxi numbers then it would have more PHVs than the other.


While a number of Hackney Carriages limit themselves to the rank and hail market, I would suggest that more hackneys use radio circuits than those that dont.

The effects of delimitation of hackneys upon the services of private hire have been neglected in the document, although I realise this will be pointed out if its in there. :wink:

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PostPosted: Sat Feb 26, 2005 1:44 pm 
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Quote:
3 ECONOMIC AND OTHER EFFECTS

License premiums


The premium that a taxi license may attract is not an indication of an unmet demand for taxis by passengers. It is however an indication of a demand for taxi licenses. Both are seperate things, often confused.

The demand for taxi licenses is not within the remit of a local authority, a local authoritys remit is the demand of passengers.

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PostPosted: Sat Feb 26, 2005 1:51 pm 
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Quote:
Who gains from restricting taxi numbers?


The first part refers to the North American experience, while the T&G may find it a nice smokescreen to use, I personally cannot see the relevence, the document does do well in this respect to effectively point this out.
[/quote]

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PostPosted: Sat Feb 26, 2005 2:08 pm 
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Quote:
Taxi plates in the UK


I do not wish to pick fault with the document, should this section not read "taxi plates in areas that restrict licenses"?

Quote:
there is nothing to suggest that limiting the number of taxi licenses benefits anyone other than plate holders, and even among plate holders the gains are not evenly distributed.


However, there is nothing to suggest that the public are worse off due to limitation of numbers. As previously stated, if a local authority believe that there is an unmet demand, it is obliged to increase taxi numbers accordingly.

Quote:
For example, taxi plates in Liverpool have been limited for around a decade, according to the OFT report. Clearly, plate holding taxi drivers are earning more than they would if numbers were not restricted – these ‘excess profits’ are represented by the £30,000 plate premium, and those who have held plates since numbers were restricted paid no premium when they were issued.


There is a contridiction here, it was staed earlier in the document that more taxis will merely lead to more taxis (coming over from private hire), the end result in being exactly the same number of licensed vehicles and an equal amount of work.

Therefore how can it be the case that drivers are actually earning more in restricted areas?

As for the point regarding those who have held plates since numbers were restricted paying no premium...... the point is?

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PostPosted: Sat Feb 26, 2005 2:25 pm 
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Quote:
Journeyman drivers

The above analysis obviously ignores the position of journeymen drivers – those drivers who do not own the taxi they drive, and are obviously in a similar position to the bulk of the New York drivers. But the position of the UK journeymen is no different – they effectively pay for the use of the plate, but this is not done quite as transparently as in New York – the plate rental is normally part of artificially inflated payments made to use the taxi.


A jouneyman driver has the opportunity to purchase his own plate from someone leaving the trade. This is not indicative of an unmet demand for taxis, just plates as previously stated.

Quote:
the plate rental is normally part of artificially inflated payments made to use the taxi.


Whilst I am no fan of artificially high vehicle rentals it would seem that what is needed is a comparision between restricted and derestricted areas for this statement to be correct (although if there is one elsewhere in the document I need to apologise :wink: )

Quote:
This position is best demonstrated by considering a fleet owner who buys a taxi for £20,000 in a restricted area as compared to a fleet owner who buys a similar vehicle in an unrestricted area. Both intend renting the vehicle to journeymen drivers. If the former taxi is to be rented out in Manchester (say) then the purchaser will also need a plate at an artificially inflated value, and if this costs £45,000 then obviously the total investment will be £65,000 rather than the £20,000 in the unrestricted area.


An anecdotal scenario.

In my experience it is normally the case that a fleet owner will rent out a vehicle where the finance agreement has elapsed, thus maximising the income from the vehicle.

Again I will point out a contradiction in the document, as it was earlier implied that after delimitation virtually all vehicles are owner driven.

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PostPosted: Sat Feb 26, 2005 2:32 pm 
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Quote:
Thus the holier-than-thou bleatings from trade representative groups about restricting taxi numbers to protect the earnings of ‘drivers’ should be qualified significantly – what they really mean is protecting the normally minority vested interest group that hold plates, whether or not they actually drive a taxi. Of course, many journeymen drivers also support restricted numbers on the basis that it protects their earnings, but it would be interesting to hear how this comes about. Many certainly do not seem aware that they are paying well over the odds to rent vehicles in restricted areas.


As you will gather from my previous posts, I have my misgivings about the T&G, indeed, the document highlights their inconsistency.

However, it is unfair to presume what the T&G or any trade body actually mean.

In general taxi owners are not as scientific as suggested in the document.

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