RACE TO THE BOTTOM: A new taxi trade race has begun… this time it’s the licensing authorities turn
Until recently the taxi and private hire vehicle (PHV) industry has been part of a relentless race-to-the-bottom to see who could charge the customer the least to capture that given market.
Thankfully for taxi drivers, new regulations, workers’ rights and a slowdown in heavily subsidised rides, that race has run after nearly a decade of price freezes or reductions.
However, as one races finishes, another one begins. This time the race involves the Licensing Authorities as they look to compete against the licensing juggernaut that is the City of Wolverhampton Council (CWC).
Earlier this year Wolverhampton officials triggered the starting gun, blaming other local authorities for pushing out of area applicants their way due to higher licensing fees and slower processing times.
Wolverhampton licensing chiefs even warned there may be a risk that their licensing service could over- expand, due to the ‘impossible’ job of judging when demand for new licences will plateau after a record- breaking year.
Since demand for minicab services bounced back after the final coronavirus restrictions were lifted, the council have revealed that they are on course to expand their pool of licensed drivers by an astonishing 10,000 in 2022-23.
Wolverhampton’s ‘success’ does not mirror most other licensing authorities who have struggled to recruit new taxi and PHV drivers in their area.
Blackpool Council are the first to react to the competition located over 100 miles away. The licensing authority has slashed the cost of licensing and binned an element of vocational training in a bid to be more competitive in the licensing market.
Like many, Blackpool Council has seen the number of licensed taxi and PHV drivers drop. It is hoped that by cutting taxi licence fees and removing a £300 vocational qualification it will encourage more people to work as cabbies and licence in the area they plan to work and live in.
A three-year taxi or PHV driver licence has been reduced to £195 from £250, and the renewal of a three-year licence has reduced to £175 from £225.
In comparison, a three-year Wolverhampton licence stands at just £100, still £75 cheaper than Blackpool’s licensing fees.
ARE CHEAPER LICENSING FEES A GOOD THING FOR DRIVERS AND PASSENGERS?
By scaling up and making licensing a nationwide business, CWC have no doubt streamlined the process and reduced some costs through bulk processing. However, it can also be argued that the council have whittled licensing driver requirements down to the bare bones to reduce those costs too.
Should it be seen as a positive move that Blackpool have chosen to reduce its standards by scrapping a related vocational qualification (RVQ) to remain competitive with a council over 100 miles away?
For drivers looking to work in the region they are licensed in there is unlikely to be any long-term financial savings. Costs will be closely linked to the tariffs offered up to customers. Higher costs, higher prices. Lower costs, lower prices.
However, if the majority of drivers are seen as cheaply licensed ‘out-of-towners’ it gives the operator a choice to further squeeze the price to a level set by the bargain basement licensing fees.
The big dilemma facing councils like Blackpool is that there is little point in raising standards in their region if others with lower standards can work side-by-side their drivers.
In life you usually get what you pay for. Removing elements of training from any sector of employment is likely to mean less skilled workers, higher churn rate, and tougher recruitment long term as the pool of people runs dry.
It’ll be interesting to see just how low some authorities are prepared to go in 2023.
