ALL THINGS LICENSING Arguments against a minimum fare
1. Increased costs for passengers: The most significant drawback and disagreement against a minimum fare is the potential increase in costs for passengers. Higher fares can make PHVs less accessible to low-income individuals, who may rely on these services for essential travel. Increased costs also disproportionately affect lower income and vulnerable individuals who rely on the service.
2. Reduced demand: Higher fares could lead to a decrease in demand for PHVs. Passengers might opt for alternative transport, such as public transport or driving themselves, which can negatively impact driver earnings despite the minimum fare.
3. Market distortion: Implementing a minimum fare can interfere with the natural dynamics of supply, demand, competition and consumer choice. This could lead to inefficiencies in the market, where prices do not accurately reflect the value of the service provided or, as above limit customer choice.
4. Potential for illegal practices: With increased regulation, there is a risk that some in the market will inevitably engage in illegal practices to circumvent the minimum fare requirements. This could include offering unregulated journeys at lower prices, which would undermine the intended benefits of the minimum fare policy and increase safety concerns for passengers.
Are we likely to see a minimum PH fare?
The debate over a minimum fare for PHV journeys is complex, with valid arguments on both sides. While the policy has the potential to improve driver welfare and service quality, it also poses challenges such as increased costs for passengers and potential market distortions. Ultimately, the decision to implement a minimum fare is likely to be one mandated by government, however it is unlikely to get off the ground.
Shortly after the Expo, Labour MP for Blackpool North and Fleetwood Lorraine Beavers asked the Secretary of State: “what assessment she has made of the potential merits of introducing mandatory fare meters in private hire vehicles”.
In written response to this question, Parliamentary Under Secretary for Transport, Labour MP Simon Lightwood said in a written response:
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“Licensing authorities have the power to set maximum taxi fares for journeys within their area. Regulated fares provide an important element of customer protection in the rank and hail market where passengers do not have a choice over which vehicle they hire. A uniform set of tariffs enables taxi meters to be used to ensure taxi fares are accurately calculated.
“Licensing authorities have no power to set fares for PHVs. Fares for PHVs are set by the PHV operator. The competitive pre-booked market allows PHV operators to compete on price as well as other factors such as quality of service.
“Apart from in London, meters can be fitted to PHVs and these would need to reflect the relevant PHV operator’s tariff. As different PHV operator tariffs may vary this could have the effect of restricting the range of operators which drivers could work with. Mandating the fitting of meters in PHVs would reduce the flexibility in the PHV sector and potentially affect the availability of vehicles for passengers and the way in which drivers can work to maximise their earnings.”
To conclude:
It is clear from the government position above that there is unlikely to be a minimum fare for private hire drivers. However, logic would dictate that it makes no sense for there to be a different contractual position between London licensing and local authority licensing and so with the judgement of the Uber, Sefton et al case imminent and likely to have a potential impact on VAT and contractual relationships, I envisage that we are only about to see the start of licensing being used as an instrument to improve conditions for drivers.
Again, echoing the discussions during the PHTM EXPO seminar, the need for consistency is key as otherwise there are likely to be both operators and local authorities undertaking any associated responsibilities differently, which is not conducive to a well run industry and will only further lead to a race to be licensed in the area with the lowest standards which does not benefit drivers, operators or customers.
As such, there is no better time to be part of an organisation keeping you up to date on licensing issues and I would again encourage members of the trade to join the IoL.
For full details, visit:
www.instituteoflicensing.org JUNE 2025 PHTM
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