URBAN MYTHS: Why the taxi industry is NOT a cartel
There’s long been a misconception from those outside the trade that the taxi industry in the UK operates like a cartel, controlling prices and limiting competition. Critics outside the industry sometimes label it as such, but a closer look reveals this argument to be misguided. The taxi trade is a regulated service, but it is far from the closed-off, price-fixing entity that a cartel represents.
To understand this debate, we must first define what a cartel truly is. A cartel is an agreement between competing businesses to fix prices, limit production, or restrict new entrants in order to maintain control over a market. It is an illegal practice because it stifles competition and is harmful to consumers, inflating prices and reducing choice. By contrast, the taxi industry operates within a framework of regulation designed to protect consumers and maintain service standards, not to limit competition or manipulate the market.
Becoming a taxi driver in the UK is an accessible process for anyone who meets the necessary criteria. The licensing process is straightforward and non- discriminatory. Like any profession where public safety is involved, there are standards that must be adhered to. For example, applicants must pass criminal record checks, topographical tests, and medical assessments.
These requirements are not barriers designed to keep people out of the trade but safeguards that ensure drivers are fit for purpose. To say that the taxi industry is a cartel because it sets standards for drivers would be the same as accusing other regulated industries of the same. Take the gas-fitting industry, for example. Could any company legally start installing boilers without meeting the safety standards and certification required? Or what about medicine? Could anyone set up as a medical practitioner without the necessary qualifications and regulation? The answer is no, and rightly so. These rules are in place to protect the public, not to artificially restrict entry or limit competition.
When it comes to pricing, the taxi trade is also often misunderstood. The fares set by taxi meters are maximum prices, not fixed prices. Drivers have the flexibility to charge less if they choose to. This is a crucial distinction. While it is true that local authorities set fare caps, these are in place to protect consumers from being overcharged. Private hire vehicles (PHVs), meanwhile, can set their prices independently. Far from price-fixing, this structure allows for flexibility while still safeguarding passengers from excessive fares.
The regulated fare structure is in place for the same reason that other public services like buses, trains, and even NHS dental care have price caps – to prevent the public from being unfairly charged for essential services. Removing these protections would likely lead to unchecked price increases, as seen in industries where regulation is less stringent.
Without price controls, services that are critical to daily life could become unaffordable for many. The suggestion that the taxi industry functions as a cartel doesn’t stand up to scrutiny. The reality is that it operates within a regulated framework designed to ensure public safety, fair pricing, and accessibility for drivers and passengers alike. Far from restricting competition, the licensing process allows anyone who meets the necessary criteria to become a cabbie. And with fare flexibility built into the system, accusations of price-fixing fall flat. In essence, the taxi industry in the UK is a public service with consumer protections built in – not the closed-off cartel some would argue.
