Why are taxi tariffs different across regions and why isn’t there a national tariff?

Anyone who’s travelled across different parts of the UK may have noticed that taxi fares fluctuate considerably depending on the region. Whether you’re hailing a black cab in London or flagging down a taxi in a smaller town, the cost per mile can differ substantially.

The reasons behind these differences are largely rooted in local economic conditions, regulations, and practicalities that make a national, standardised tariff unfeasible.

Taxi tariffs are set by local councils or other relevant regulatory bodies, who take into account the specific circumstances of their area. Factors like fuel prices, vehicle maintenance, insurance, and the cost of living all play significant roles in shaping these fares.

In large cities like London, where drivers face congested roads and high operating costs, fares tend to be higher. This is not just to compensate for the longer journey times due to traffic, but also to cover the high vehicle costs and a higher cost of living. Taxi drivers in other cities also need to deal with costs that limit vehicles to wheelchair accessible or be compliant with stricter emissions standards. In rural areas, meanwhile, there may be fewer passengers but longer journeys, which demands a different fare structure to make the service viable.

Beyond operational costs, regional differences in demand also affect taxi pricing. In high-demand areas such as major cities or tourist destinations, there’s a steady stream of passengers. This means drivers can charge lower fares per journey while still maintaining a high volume of business. In quieter, less populated areas, taxis are in lower demand, and drivers need to charge more per fare to make up for the fact that they have fewer passengers.

This balancing act between supply and demand means that a national tariff would be impractical. A standardised rate would likely undercharge in high-cost regions, driving taxi companies out of business or pushing drivers to leave the profession. On the other hand, it could overcharge in areas with lower operating costs, making taxis unaffordable for many passengers in those regions.

By allowing local authorities to set taxi tariffs, there is a degree of flexibility that can accommodate regional variations. Councils can adjust fares based on local circumstances, whether that’s an increase in fuel prices or changes in demand. For instance, a rise in the cost of living in a specific region could lead to an increase in taxi fares, but only in that area, thus preventing unnecessary fare hikes elsewhere.

While the idea of a uniform national taxi tariff might seem fairer or simpler on the surface, it overlooks the complexities of the industry. Regional differences in costs, demand, and even local regulations make a one-size-fits-all approach unworkable. Allowing local authorities to set tariffs based on their unique conditions ensures that fares remain fair and taxis remain accessible across the country, while also ensuring that drivers can earn a fair living wage for the area.