Interesting to contrast the approach in Oxford with that in Cambridge, but it does provide a chance to wheel out that article by the Cambridge Council leader David Howarth, who is now an MP.
It's the best analysis of the restricted UK trade I've read by anyone outside the trade.
Taxis in Cambridge - The Facts
Council Leader David Howarth outlines the Council's position on issuing new licences.
1. What is the problem?
There are often long queues in Cambridge at taxi ranks and it is practically impossible to hail a cab in the street. People often abandon taxi queues in despair. This happens at all times of the day, not just late at night. An independent study by nationally recognised transport researchers Halcrow Fox has found that there is 'substantial unmet demand' for taxis in Cambridge.
Taxis form a vital link in the public transport system, allowing people to complete journeys, eg by train, that they would otherwise do by car. If there are too few taxis, people will turn to the private car in greater numbers, causing more congestion and pollution.
2. How has this problem come about?
There are two types of taxi, 'hackney carriages' and 'private hire cars'. The difference is that only 'hackney carriages' can pick up from ranks or from the street. The dispute is about 'hackney carriages' not 'private hire cars', whose numbers are not regulated.
The shortage of cabs in Cambridge has come about because of past collusion between the cab drivers and the council to create a closed shop to keep new drivers out. Cab drivers have, over the years, persuaded councillors to limit the number of cabs to less than the number required by the public. This means that people who are fully qualified to drive cabs are kept out. Last month, for example, when one taxi licence became available, 19 people applied for it. 18 of them went away empty handed, even though they were just as qualified to drive a cab as the person who received the licence.
3. What is the proposal to deal with the problem?
The Council is proposing, in the first instance, to issue 14 new tax licences. Then, on 1 July next year, the formal limit on the number of taxi licences will be lifted completely.
4. Why not de-limit straightaway?
The Council wants to see a smooth transition to the new system. The fourteen new licences will deal with the immediate crisis, but the de-limitation will mean that we never have to face such a crisis again. After 1 July 2001, instead of a big increase in taxi numbers every couple of years, as required by law since 1985 if there is 'substantial unmet demand', there will be a slow increase in numbers as the market grows.
5. Won't quality decline?
No. The Council is not deregulating taxis, only de-limiting the numbers. The requirements for drivers eg to pass a 'knowledge' exam will remain and the new taxis will have to be either of the 'London' design or an equivalent such as a people carrier.
6. Won't existing drivers end up unable to make a living?
No. First, there will not be a big rush all at once of new drivers. After the first 14, the increase will be quite slow, as the market expands. The main reason for this is that a new cab costs around £25,000, and no-one is going to risk that kind of money on a whim.
Secondly, the taxi trade in Cambridge is expanding rapidly, as the general economy of the city is expanding. In the past 10 years, the number of taxi journeys taken in the city has risen by 65%, despite the fact that fares have risen by 37% and that there are too few cabs. In an average year, the money coming into the taxi trade rises by about 9%, well ahead of average earnings. All that the council's policy will do is slow down the rate of increase in income per taxi.
Thirdly, fares are set to rise this September by 6.5% anyway, and the new formula for setting fares takes into account rises in taxi costs, eg rises in fuel prices.
7. What is this about drivers investing £15,000 or £20,000 in a taxi plate?
Under the old closed shop system, a kind of 'grey' market developed in which existing taxi drivers 'sold' their right to operate taxis to newcomers. In some cases the holder of the licence gave it up to the newcomer. In other cases, the holder of the licence merely 'rented' the right to operate the cab to a succession of other people, sometimes to more than one person at once. There are even instances of people who hold more than one licence who make money not by driving but by 'renting' out their licences.
The Council turned a blind eye to these practices, although it has forbidden them outright for more recent licences.
De-limitation means that in the future people who want to become taxi drivers will not have to pay grey market prices for licences in deals with existing taxi drivers. The cost of a licence from the council is presently under £300, and it is set to fall dramatically. In the future, drivers will have lower costs and will be able to make a living more easily.
Existing drivers who paid over the odds will lose out, but the Council says that since the plates only had a grey market value because of the unfair closed shop and on the backs of dissatisfied customers, drivers could not reasonably expect that such unfairness would last forever. They made a business decision to trade on a grey market. Some business decisions work out better than others.
Published by Keith Edkins on behalf of Cambridge City Council Liberal Democrat Group © July 2000
_________________ Taxi Driver Online
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