KEEPING CROSS BORDER: Why some drivers and operators want to KEEP the controversial rules

Image credit: DALL.E (AI generated)

The rules surrounding cross-border taxi and private hire vehicle (PHV) operations in the UK have long been a source of controversy. At the heart of the debate are the current regulations that allow licensed taxi and PHV drivers to pick up fares outside of the local area in which they are licensed, provided they have been pre-booked. These rules have sparked friction between drivers and companies, particularly in the growing gig economy and app-based ride-hailing services.

The main bone of contention lies in how drivers can operate in areas where they are not licensed. Historically, taxi and private hire drivers were bound to work within the jurisdiction where they held their licence, providing local councils with control over safety standards, driver vetting, and regulation enforcement. However, with the rise of PHV companies like Uber and Bolt, many drivers have sought licences in areas with less stringent requirements and lower licensing fees, but continue to operate in busier, more lucrative cities. This has led to accusations of "licence shopping", where drivers bypass tighter regulations in one area by obtaining licences elsewhere.

For local drivers, particularly those licensed in highly regulated areas, the ability of out-of-town drivers to work within their turf represents unfair competition. They argue that these drivers undermine safety and bypass the higher costs of operating in cities with tougher licensing standards. Councils in big cities echo these concerns, noting that out-of-area drivers are harder to regulate, and they often don't adhere to the local standards regarding vehicle inspections, insurance checks, and background screenings.

Why do some private hire vehicle drivers want to keep the rules?

For many PHV drivers, especially those affiliated with companies like Uber, the current rules offer flexibility and better earning potential. Drivers can work across multiple jurisdictions, chasing demand rather than being restricted to one location. This is particularly valuable in the gig economy, where income can be volatile. If cross-border rules were tightened, there would be 10,000’s of drivers licensed to only work in the Wolverhampton area, which would force most drivers to reapply for a licence in their chosen region that they actually plan to work.

Another important factor is that certain areas have licensing systems that are easier and cheaper to navigate. Drivers, especially those working part-time or with limited financial resources, favour these jurisdictions as it lowers their operating costs. In a competitive market, keeping overheads low can be critical for maintaining profitability. These drivers therefore have a strong incentive to resist any changes to the current cross-border rules.

Ride-hailing companies like Uber and Bolt benefit enormously from the existing cross-border rules. By allowing their drivers to operate across multiple jurisdictions, they maintain a larger, more flexible workforce that can respond to shifts in demand quickly and effectively. This scalability is crucial for these companies, whose business models rely on having enough drivers available at peak times to meet customer demand.

If the rules were changed to limit drivers to operating only within their licensed area, companies would likely face higher recruitment costs and logistical challenges in maintaining service levels. It could also reduce the attractiveness of working for such platforms, leading to driver shortages and an increase in fare prices.

From a business perspective, keeping the cross-border rules as they are helps companies expand into new markets more easily and reduces their reliance on strict local regulations that might otherwise impede their growth. This flexibility is integral to the ride-hailing model, which seeks to balance supply and demand dynamically, without the geographic restrictions that traditional taxi firms face.

The controversy over cross-border taxi and PHV rules pits local drivers and councils against ride-hailing companies and drivers who seek greater flexibility. The existing rules offer significant benefits to drivers who want the freedom to work in different areas and to companies that rely on an adaptable workforce. However, these advantages come at the cost of local regulation and competition fairness, with many stakeholders calling for tighter rules to ensure safety, fair competition, and adherence to local standards.