Taxi Driver Online

Casino cabbies or prudent investors? (2/5/2006)

A contributor to Taxi Driver Online’s internet discussion forum recently expressed the view that derestriction of taxi numbers was unfair on those who had ‘invested’ in a plate, since the license holder would be left with a worthless asset possibly secured on the family home.

To an extent this is a compelling argument, but on the other hand the fact and effects of derestriction are well know in the trade, particularly since the Transport Act of 1985 ‘fettered the discretion’ of local authorities to limit the number of taxi licenses that they issue. Thus is there merit in an argument that those buying a plate can effectively treat it as a cast-iron, one-way investment, while in the real world there’s always a risk that things can go pear-shaped?

Therefore the view at the opposite end of the spectrum is that plate purchasers knew the risks involved and there is thus no moral case to protect plate values; in effect they took a risk akin to gambling their life savings at the roulette table, and while a loosing bet might engender sympathy, in the final analysis their loss can only be attributed to foolhardiness and thus unworthy of any assistance other than the phone number of Gamblers Anonymous.

It should go without saying that the former ‘investment’ perspective tends to be held by those with a vested interest in the restricted numbers status quo, while the latter ‘caveat emptor’ viewpoint is more typical of opponents of the idea of controlling taxi numbers.

Typical of the latter ‘let the buyer beware’ approach was that proffered by the Office of Fair Trading when it recommended that the UK Government should order local authorities to derestrict taxi numbers – in essence it said that since local authorities could delimit at any time then those buying a plate should be well aware of the risks involved.

Of course, as in much of life, these polar opposite takes on the situation are probably best ignored in favour of a more balanced ‘third way’. This is particularly so since there seems little doubt that many in the trade are actually not fully aware of the risks involved when buying a plate. For example, many in the trade (not to mention some involved in regulation such as councillors and council officials) are anything but well appraised on the various legal and technical issues surrounding these matters. And anecdotal evidence (at least) suggests that some councillors involved in licensing do not even know that their local authority restricts taxi numbers!

Thus how many have bought plates in good faith unaware that their local authority is not complying with the legal requirement to undertake the regular surveys that are a prerequisite to restricting taxi numbers, thus leaving themselves open to a legal challenge?

And the law in this regard is in something of a state of flux at the moment, with several important issues still to be clarified, but how many are still buying plates unaware of the implications of several legal challenges? For example, a couple of Scottish local authorities decided that it would be inordinately expensive to survey with sufficient frequency to satisfy settled case law, and consequently derestricted numbers; thus how many are buying plates in areas vulnerable to a challenge on this basis?

Our so-called representative groups do not help either, with their rose-tinted and arguably misleading take on both the OFT’s recommendation and the Government’s reaction thereto no doubt wrongly convincing some people that investing in a plate is effectively a gilt-edged investment. And in a House of Commons debate the then Transport Minister Tony McNulty gave succour to this perspective with a no doubt politically inspired eulogy regarding the restricted numbers regime in Brighton and Hove, which not only seemed to contradict the Government and OFT’s original stance and promise to revisit the issue depending on the extent of the removal of numerical controls, but also clouded the issue and no doubt assisted some in dumping their plates on to unsuspecting buyers.

Of course, some in the trade who cry foul when the possibility of derestriction arises knew full well the risk that they were taking on when buying the plate, but being dishonest about what they knew at the time helps their case against later threats to remove numerical controls. Others who paid nothing for plates or relatively small sums a long time ago deserve only the sympathy afforded to those who lose a privileged position not available to other similarly qualified people.

However, there are some, particularly more recent plate purchasers, who are deserving of more sympathy, but the best way of avoiding this is to fully appraise people of the facts. But in a trade often characterised by ignorance, dishonesty and shady dealing, this is no easy task, particularly when it’s often those charged with regulating the trade that are undertaking the sharp practices and exploiting the more vulnerable in the trade.

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Taxi Driver Online
www.taxi-driver.co.uk

Well Dusty what is this "balanced favoured third way" you mention?

Dusty I do not think it's as simple as you make it sound, when you say that

"in the final analysis their loss can only be attributed to foolhardiness and thus unworthy of any assistance other than the phone number of Gamblers Anonymous."

What about custom and practice, and before you say it I am aware of the old saying that custom and practice is the last refuge of the scoundrel

Now remember, before the howls of execration start I have no vested interest in any taxi or company other than the one I drive which does not belong to me.

The aim of the piece was to contrast the two opposing veiws on the subject and then to suggest that the the situation isn't quite as black and white as is often proferred, and that a third way is perhaps more appropriate, and unsurprisingly this perspective lies somewhere between the two extremes. Another point is that the protagonists tend to adopt one of the two extremes, and in effect there is no middle way.

To recap the two extremes might be summarised as:

1 The purchaser knew the risks and therefore if numbers are uncapped then he only has himself to blame.

2 The buyer must be protected at all costs since 'custom and practice' means that it would be unfair to make the plate worthless.

My point was that either view might be appropriate in individual cases, but that it's unfair to say that all purchasers were acting in a foolhardy manner, but on the other hand even those who bought the plate in good faith cannot rely on it retaining its value forever.

In practical terms this means that although I would not say that the position of plateholders should be effectively ignored, on the other hand the trade can't be run in their interests for ever and a day, and thus a delayed or phased implementation to deresrtiction is perhaps a fairer method, and while the article doesn't get as far as pointing this out specifically, it is a position that this site has taken in the past.





Well I agree it's not as simple as the GA scenario, but surely the article was a critique of that position, thus in effect you're agreeing with me?

Note that if you read the full paragraph then this make clear that the casino cabbie scenario wansn't my viewpoint, it was a 'comare and contrast' situation with the opposite extreme, which I duly did and concluded that there was a third way between the two extremes?

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Taxi Driver Online
www.taxi-driver.co.uk

Are you then suggesting managed growth to give incumbent plate holders a soft landing?

P.S all this talk about the Third way makes me wonder if you are actually Tony Blair, Ha Ha only kidding.

Yes, a soft landing is a good phrase, but I'd prefer the term 'managed derestriction' rather than 'managed growth'.

Of course, 'managed growth' is basically vested interest spin on the scenario whereby an LA adheres to its basic legal responsibility to issue enough plates to meet unmet demand. But even where this takes place the main growth seems to be in plate premiums and PH numbers.

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Taxi Driver Online
www.taxi-driver.co.uk

remember when it goes free for all like Sheffield, Carlisle, Bristol ( from 247 to 800+ in three years, and then the caps came back on) etc, the vested interests i.e. the ones who want a free plate and go on about how its unfair that so and so has one will have totally devalued the trade.

But then it will be too late.....and the vested interests wil have prevailed, just like the vested interests who wanted bus deregulation, now we have two companied operating on the same routes, at the same times, offering the same fares, back then you had the same vested interests barking on about how competition would improve things.

As for plate values, yes its a risk, however you have to ask yourself why councils operated a restricted policy? is it because of a lacl of rank space? do they want thier city centres clogged up wih taxi's like the buses? is thier even demand for all these extra cabs? or is it for the Saturday night people? personally i think its the vested interests who are against anyone doing well and wanting to better themselves.

Yeap, that's me.

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IDFIMH

Well that is my major concern 187ums, it's the 247 to 800 that worries me, but then theres the Cognitive Dissonance that this causes

So if taxi drivers chose to run their own vehicle in Edinburgh and thus numbers increased from around 1,200 to 3,500, how would this effect you if you don't have a plate stu? You would still have the same at the end of your shift, surely?

OK, there might be some real increase in supply, but it's also worth recalling that places like Sheffield and Bristol are equally or more populous than Edinburgh, so 800 taxis does not seem a particulary huge amount (and I doubt if there are anything like 3 drivers per taxi, as in Edinburgh), and the dramatic rise in numbers is probably indicative of how distorted the market was previously.

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Taxi Driver Online
www.taxi-driver.co.uk

Well Dusty no one ever seems able to explain this one, or I am just thick, but how would trebling the amount of vehicles help anyone, would the passenger numbers increase threefold or just stay the same, surely it is basic economics, treble the amount of the service providers against a fairly static customer base = one third of the pie each = one third of my takings at the end of a shift = me being out of pocket , simple I know but so am I

You could increase the number of vehicle a hundred fold, but as long as the number of drivers stays roughly the same, then it shouldn't effect your takings?

Or can Edinburgh's cab drivers drive more than one cab at a time?

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IDFIMH

Now is this a softening of attitudes?



Perhaps not

Captain Cab

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Think of how stupid the average person is, and realize half of them are stupider than that.
George Carlin

Well Captain what happened in your neck of the woods, did you still take home the same amount at the end of your shift?