IoL - ALL THINGS LICENSING A FORMULA FOR SETTING HACKNEY CARRIAGE FARES
Article by Mike Smith, Senior Specialist for Licensing and Community Safety at Guildford Borough Council and Vice-Chair of the Institute of Licensing South East Region.
Please note that this article represents my own views which are not presented as the views of the Institute of Licensing.
The post covid ‘return to normal’ has certainly been over- shadowed by world events which have subsequently impacted further the issue of increasing prices for many households and businesses. The notable further increase in the price of fuel has caused many sectors to increase their prices. For the hackney carriage trade, where prices are set by the local authority, this is not a straightforward or quick process.
THE SETTING OF TAXI FARES
The ‘taxi’ trade provides an essential service to travelling members of the public, from early morning trips to the air- port to late night journeys home after a night out, and everything of a more day to day nature in between. The prin- ciple of each journey is going from point A to B (occasionally via C and D and back to A again) for which a price is payable.
For most journeys undertaken in a taxi (hackney carriage) the fare is restricted to the maximum as displayed on the meter. Most customers will pay the meter price, occasionally giving a ‘tip’ although disputes over prices can and do happen, either leading to complaints to the authority, or worse still altercations between driver and passenger.
The taxi licensing regime is relatively unique in providing the means for regulators to restrict prices. The legal power of setting hackney carriage fares lies within section 65 of the Local Government (Miscellaneous Provisions) Act 1976, which says (emphasis added):
“65 Fixing of fares for hackney carriages
(1) A district council may fix the rates or fares within the district as well for time as distance, and all other charges in connection with the hire of a vehicle or with the arrangements for the hire of a vehicle, to be paid in respect of the hire of hackney carriages by means of a table (hereafter in this section referred to as a “table of fares”) made or varied in accordance with the provisions of this section.”
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A study of the table will also reveal that some licensing authorities have not reviewed their fares for several years (some since 2008). Surely there is scope for more consistency for the public and taxi industry.
In my own area, it is widely known that Guildford’s decision to reduce fares in 2016 was challenged by way of Judicial Review. The formula used in Guildford was subject to signif- icant scrutiny as a result of the JR and sharing that
APRIL 2022
The legal power to set fares is a discretionary function – ‘a district council may fix the rates’ – they don’t have to. In practice, taxi fares are capped in most areas, presumably to create a level playing field, and to provide public protection from unscrupulous charging practices.
There is further guidance on fare setting to Licensing Authorities under the DfT Best Practice Guidance (emphasis added):
“52. Local licensing authorities have the power to set taxi fares for journeys within their area, and most do so. (There is no power to set PHV fares.) Fare scales should be designed with a view to practicality. The Department sees it as good practice to review the fare scales at regular intervals, including any graduation of the fare scale by time of day or day of the week. Authorities may wish to consider adopting a simple formula for deciding on fare revisions as this will increase understanding and improve the transparency of the process. The Department also suggests that in reviewing fares authorities should pay particular regard to the needs of the travelling public, with reference both to what it is reasonable to expect people to pay but also to the need to give taxi drivers sufficient incentive to provide a service when it is needed. There may well be a case for higher fares at times of higher demand.”
As shown above, the DfT suggests that fares should be practical, potentially set using a simple formula and regularly reviewed. Despite the reference to formula, there is no suggestion on what that formula should look like.
A quick glance at benchmarking data of hackney fares by licensing authorities published monthly in PHTM shows such huge variation, with fares over a 2-mile journey ranging from under £5 to over £10 (or over £11 for London Heathrow). Geographically, while it is likely that there are regional cost fluctuations, the distance from one of the lowest (Epping Forest) to the highest (London Heathrow) is about 40 miles.
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