Start Up Notes

It must be pointed out from the outset that it is virtually impossible to produce and distribute generic information to cover all aspects of this rather complex industry, as in addition to the London area, there are 373 other licensing authorities in England, Wales and Scotland, not counting those in Northern Ireland, all of which have their own individual policies, conditions of licence and enforcement procedures. We set out below a basic outline of the parameters of the taxi and private hire trade, and recommend that anyone who is interested in pursuing this line of occupation to contact their local licensing authority in the first instance, to obtain local requirements as regards licensing. Following on from this, it is then recommended that candidates contact the relevant organisation listed at the end of this Profile bulletin for further information and guidance.

Hackney carriage and private hire services share their primary marketing objective - to carry passengers safely and comfortably from A to B - but remain quite different sorts of operation. A hackney carriage allows drivers to ply for immediate hire in the street or from official taxi ranks. Hackney carriage fares are controlled by the council in 365 of the 374 local licensing authorities in England, Scotland and Wales and governed by means of a sealed taximeter, and by a table of fares. In a reducing number of local authorities in England and Wales the number of hackney carriage vehicle licences is capped (regulated), so there is no guarantee of entry to this section of the trade. Some local authorities maintain 'waiting lists' for hackney licences. In the major conurbations hackney carriages are typically ‘black cabs’ or purpose built vehicles, ie. London type Metropolitan Conditions of Fitness vehicles. Currently, however, the majority of towns and rural areas allow ordinary saloon cars, and/or increasingly MPV type vehicles, to have hackney plates and use taxi ranks.

The most characteristic and important difference with private hire vehicles is that their service must be pre-booked with an operator; that is, they are not permitted to ply for hire. Stiff penalties can result if they do so, including prosecution through the Court – which usually includes a charge of inappropriate or no insurance, resulting in heavy penalty fines and six points on the DVLA licence and, frequently, subsequent revocation of the private hire driver licence as well.

Private hire drivers usually work through a circuit based at an operating centre which makes provision for bookings with customers either on the telephone or from walk-in trade; although there is no real restriction on a PHV driver being a sole trader and holding his/her own operator's licence. Unlike taxis, there are no restrictions on the number of private hire vehicle licences which may be issued by a local authority. The exception to this is in Scotland, where private hire cars may be restricted by local authorities “on grounds of overprovision”.

The most revolutionary change the UK road passenger transport industry has seen is the development of “app-based technology companies”, starting in London in 2012 with the California-based company Uber. Subsequent companies such as Lyft, Hailo and others have entered the UK market with varying levels of success. The concept behind the app-based structure is that as a “platform”, it offers a way of connecting self-employed drivers with potential customers, providing a smartphone app that serves as the middleman between the “driver-partner” and the passenger. The customer downloads the app and lets it know their current location and where they want to go. A booking request is then forwarded to the “platform” which identifies the nearest available vehicle; cars are available both instantly and, more recently, to pre-book. Customers give the company their credit or debit card details when they sign up and the fare is deducted after the journey. Uber, for example, uses an algorithm so that prices vary depending upon demand. “Surge pricing” comes into action when demand is high at peak times such as Saturday nights, bank holidays, special events, and even inclement weather. After each journey, customers have the option to provide a rating for their driver and feedback for their journey. The driver can also rate the passenger.

Remuneration for private hire drivers varies greatly; the majority of drivers are self-employed owner/drivers who pay a weekly radio rental to their operator and then retain their cash fares. Drivers who run company-owned cars can be either fully salaried or operate under a fare-sharing arrangement with their company. An operator's licence is required for the operating centre in order to make provision for private hire bookings, and similarly a private hire vehicle licence is a requisite for any vehicle used on the circuit, and a private hire driver's licence must be held by anyone driving these vehicles. In the case of the “technology company”, the fares go direct to the company and drivers are paid a percentage of those fares.

It is increasingly popular for mixed fleets of vehicles to be run by a company, whereby hackney carriages and private hire vehicles are operated by the same firm. It is important to note here that whilst hackney carriages can often be used for private hire service, the reverse is never the case. There is such a wide variation in the taxi and private hire market across the country, that research into supply and demand in one's local area is crucial before investment is made. London is a law unto itself; whilst most hackney carriage drivers are still independent proprietors, there are also huge black cab circuits - the largest black cab company in London is the 4,000-plus Computer Cabs (ComCab), whose vehicles are dispatched via satellite, and whose drivers are amongst the increasing number who use the credit/debit card swipe system to collect taxi fares. In fact TfL/TPH has now mandated contactless card payment facilities in all London hackney carriages.

The licensing of private hire vehicles (minicabs) in the London area is governed by the Private Hire Vehicles (London) Act 1998. All private hire licensing functions come under the auspices of the Taxi and Private Hire division of Transport for London, which also licenses all London black cabs. Prospective candidates who wish to join a private hire circuit in London can log on to the TfL/TPH website (www.tfl.gov.uk) to locate the nearest licensed PHV operator in their district.

Outside the London area, the entire country's hackney carriage and private hire fleet is regulated by local authorities; this is true also in Scotland. In Northern Ireland the industry is regulated by the Department of the Environment. Despite heavy taxes on fuel and increasing congestion in large cities throughout the UK, public demand for quick and flexible transport has seen the use of cars and taxis continuing to remain high. Privatisation of bus and rail services has seen an increased frequency of public services on popular routes and a decline on less used routes, rural areas in particular, which may indicate a potential market for taxi/private hire services – in particular using a hackney carriage on a set route with shared fares.

The recent concern, on the part of both local and national government surrounding air quality and emissions, is having a profound effect on the industry, particularly the hackney carriage sector. In London, Birmingham and several other large conurbations, the proposed restrictions on emission levels, and proposed toll charges for all vehicles entering Clean Air Zones, mean that diesel vehicles in particular may have to be withdrawn from the taxi fleet far sooner than their owners or drivers had envisaged. It is crucial for any candidate considering entry into the taxi market to keep an eye on news developments in this regard, as it will greatly influence the choice of vehicle they may purchase or lease for hire and reward.

Customers will be both corporate and private; the scope for tailoring a taxi or private hire business to meet more and more specific demands of a target market in their area is very broad indeed. To provide steady income, private hire (and, increasingly, hackney carriage) services form a contract with companies who wish to maintain a high standard of transport, and who depend on flexibility, immediate availability and convenience. The increasing numbers of taxi and private hire firms across the country which have achieved BS/EN ISO9002 accreditation stand as proof of both the necessity and the marketability of higher standards; these companies have very often secured lucrative contracts as a result of their ISO9002, Investors in People and similar standards, and more and more businesses (and some local authorities and County Councils) which themselves have these accreditations seek the same standard when they tender for contract.

It is important to note that while contract work can be lucrative, it is essential to clarify terms at the outset; if payment is on a monthly basis or if use of the service is slow, cash flow problems may result. For this reason the majority of private hire/taxi firms usually aim to maintain a mix of cash and contract work. Again, there is a myriad of types of contract work to explore: local authority schools and Social Services, wedding hire, chauffeur/limousine and executive work, provision of staff transport for pubs, clubs and hotels, executive airport services - dependent on the locality, the list is endless, and the choice is a crucial commercial decision which requires thorough market research.

The nature of hackney carriage driving tends for the most part to be dominated by independent taxi proprietors, although this profile is fast changing as more and more proprietors either decide to operate or to join a circuit. Hackney carriage drivers usually target areas of high pedestrian traffic such as shopping centres, high streets, coach and rail stations, airports, hotels and pubs and clubs at closing time. Particular notice should be taken of the availability and position of rank spaces in the community, as well as one-way streets, access to bus lanes and pedestrianised areas, when considering this sector.

Case law has established that hackney carriages may be used for private hire work outside, as well as within, their own district; this practice has proliferated to the extent that many local licensing authorities have now brought in an “intended use” policy, whereby the applicant must declare that he/she intends to work a set percentage of the time within the district where the licence was issued (see also reference to cross-border under ‘Legal’). However, hackney carriages may never ply for hire at ranks or roads outside their licensing area.

Hackney carriage drivers, particularly those in larger cities, can derive considerable extra income by carrying advertising for other businesses on their vehicle. The red KitKat and the pink Financial Times "black cabs" broke the ground for this practice in London; you can now see all-over advertising on purpose built hackney carriages in most of the major conurbations. It is important to note that legislation allows for this practice on hackney carriages; this is not the case for private hire, whose signage is censorable by the licensing authority. (See 'Legal' below.) In any event, hackney carriage candidates should check with their local authority to see if a livery condition of licence would prevent all-over advertising; specific-colour livery conditions have been successfully challenged through the Courts in several areas, but they do exist in many others.

As the majority of drivers in the taxi/private hire industry are self-employed, for the most part they can decide which hours they wish to work; therefore it is important to understand the structure of the trade and how one's choice of hours will affect income. The busiest times for private hire firms - and indeed, any hackney carriages whose drivers choose to work - are Friday and Saturday nights, particularly at pub and club closing times, with people wanting transport into and out of the city centre once public transport has stopped running.

Self-employed drivers may be tempted to cover as much custom as possible, but must be careful not to exceed safe working hours. There is European legislation which from time to time has threatened to affect UK drivers' cumulative hours, even those of self-employed drivers; so far this has not come to pass. A large number of larger firms work a shift system to make sure all customers are covered adequately, and that drivers receive a fair workload.

Owing to the increased risk to drivers in both sides of the trade, it has become necessary to include this section of the document for the protection of prospective licence applicants. The fact that 66 drivers have been murdered in this trade over the past 25 years cannot be ignored; at least two thirds of these murders were proven to be racially motivated. Obviously the main risk to drivers occurs during night time hours, especially weekend nights after pubs and clubs close, and revellers - often under the influence of drink and/or other substances - are clamouring to get home, and do not care which type of vehicle they use.

However, in recent years several drivers have been murdered during daylight hours as well, so driver security must now be a major consideration for both operators and the drivers themselves 24/7, and in increasing numbers of communities there have been established well-known ‘no-go’ areas for drivers.

Two major developments have been utilised in growing numbers of licensing areas to curb danger levels, and both are proving to be successful: CCTV cameras inside taxis and PHVs, and marshal schemes monitoring and directing vehicle movements in town centres. The presence of a CCTV camera in a vehicle is the most effective deterrent, as passengers are made aware (usually by a sign in the cab) that they are ‘on camera’; this has greatly reduced not only attacks on drivers, but also the incidences of passengers ‘doing a runner’ - not paying the fare. In-car CCTV has also reduced the number of false claims by passengers against drivers.

Unfortunately the use of CCTV cameras is not as widespread across the country as it should be for the safety of drivers and passengers alike, mainly because in most areas the drivers themselves have to fund this equipment - which can cost in the region of £250-£600 per unit. It is hoped that more subsidies may be made available for drivers to be able to afford these cameras, as they really are life-savers.

As for marshal schemes, in virtually every area where they have been piloted the success rate has been very high, and the scheme has been continued through funding by the police, the local authority, and in some instances the ownership of a private club or other local business establishment. A team of people is employed to direct the movements of hackney carriages - and in some localities, private hire vehicles as well - in such a manner as to ensure that (a) the vehicles are kept moving around busy pick-up areas in an orderly manner; (b) passengers are able to get into these vehicles and be taken away as quickly as possible; and (c) the safety of both drivers and passengers is maintained by the presence of the marshals. Hopefully more of these schemes will be started across the UK. Funding remains a problem.

The industry generally is very competitive by nature. Various factors contribute to this: a "them and us" outlook between hackney carriage and private hire drivers; (limited hackney plates in some licensing authorities resulting in a waiting list doesn't help matters); also undercutting fares by some operators in the area is common, and may result in new entrants meeting with aggressive response tactics from other local firms. Best advice here: go about your business in a fair, efficient manner, market yourself correctly and try to forget about what the competition is doing.

As regards fare structures, whilst hackney carriage maximum fares are set by the council, it is possible - and very often the case - that hackney carriages operate below that maximum tariff. Commonly, private hire fares are pitched somewhat lower than the hackney rates; thus the element of competition, and frequent complaints of undercutting.

Franchises in this market are on the increase, as larger firms whose philosophy nets good commercial results wish to market that expertise. (See 'Promotion' below.)

Without doubt the largest perceived competitive threat comes from the “technology companies”, who have pitched their business at the most lucrative target markets across the world, and often operate on the knife-edge of local and national regulations – which is more difficult in the UK than in other countries, as our country puts up 374 different game plans for them to adhere to, or overcome as the case may be. Further comments are in ‘Promotion’ below.

The best form of advertising for hackney carriages is to be available and visible, whereas the most marketable commodity for a private hire firm used to be simply a catchy telephone number that is easy to remember. The phone number is still a ‘hook’; however, nowadays so many bookings can be done via apps and websites, it is crucial that a company’s website is visibly impactful, informative and always up to date. For any size of transport provider, business cards should still be distributed at restaurants, pubs and clubs, hotels, hospitals, airports and other public places. Cards can be handed to customers to encourage repeat trade. Further advertisements could be placed in local business publications and the local press, and if special occasions are catered for this should feature in related publications. (Never place adverts or cards without permission; sticking cards on telephone boxes may constitute an offence.) Increasingly, transport providers – especially the “technology companies” – are using local radio as an advertising medium.

All promotions should highlight any competitive advantages or special services offered: 24-hour service, female drivers, no extra charges, executive service etc. If targeting a company for a contract, contact the person responsible with details of your company, your service, and details of your proposition for business.

Good customer service will encourage word-of-mouth recommendation and repeat trade. The saying in this industry is that if your driver is on time for Saturday's customer, you will get a call from that customer on Monday. Collections should be punctual, drivers polite and knowledgeable of local routes, and vehicles should be kept clean and prices reasonable. Increasing numbers of companies are providing their drivers with, if not formal uniform, a standard of dress which usually includes a shirt and tie, conventional trousers/skirt, and company logo on tie/epaulets/jumper. This standard of dress is widely welcomed by customers.

When an existing business expresses concern about the competition from “technology companies”, they are advised that the best way they can compete is by promoting their own plus-points built up over the years: a cost-effective and efficient booking and dispatch system, including establishing their own app; repeat business from loyal customers; the rapport between their drivers and those customers; driver loyalty and tenure of employment/service; punctual pick-ups, clean cars, uniformed drivers and many more features.

Costs for setting up as a hackney carriage driver vary greatly across the UK, depending upon the type of vehicle the proprietor wishes to license: some licensing authorities have mandated that all hackney carriages must be wheelchair accessible; other districts will license a mixed fleet of purpose built taxis (Metropolitan Conditions of Fitness ‘black cab’ or similar spec MPV) and saloon/estate cars. Increasingly, emission levels will dictate the future purchase of hackney carriages in particular. It is highly recommended that before purchasing or leasing any vehicle for taxi use, the applicant should check with his/her local licensing authority in respect of any restrictions (or indeed, list of “designated vehicles” for wheelchair bound passengers under the Equality Act – see ‘Legal’ below).

Hackney carriage vehicles usually must be equipped with a taximeter, which can be purchased for around £250-£300, or leased on a monthly or yearly basis. The cost of the hackney carriage licence will vary according to location, and further costs will be incurred in the application process. Most licensing authorities require a medical examination costing around £80-£150, an additional driving test in a hackney carriage and an area knowledge test for which fees will be charged. Some councils also recommend lessons in a hired hackney carriage.

The costs for setting up a private hire service will again depend upon the local area, and the type of licence applied for: ie. operator, vehicle and/or driver. Increasing numbers of local authorities are setting vehicle age policies or conditional restrictions (this may or may not also apply to hackney carriage vehicles), so again it is difficult to set parameters for the cost of a private hire vehicle which will be suitable to meet the appropriate standards for the Certificate of Compliance from the council. A private hire operator's licence averages in the range of £300-£5,000 (very often graduated based on fleet size); a private hire vehicle licence can be in the region of £100-£400, and a private hire driver's licence (badge) can be anywhere from £175 to £550. Costs will also be incurred in the process of application, as above.

Increasing numbers of licensing authorities are now issuing a “dual badge” enabling the applicant to drive both hackney carriages and private hire vehicles. It must be stressed, however, that unless the driver is dual licensed in this manner, a hackney carriage driver may not drive a private hire vehicle – and vice versa, so a private hire driver may not drive a hackney carriage.

The duration of driver and operator licences has changed following an addition of regulations to the Deregulation Act 2015: private hire and hackney carriage licences are now issued for three years, instead of one year as was the case previously, unless individual application is made for a shorter period under exceptional circumstances. Similarly, private hire operator licences are now issued not for one year but for five years; obviously this can make a large difference in the licence fees, depending upon the licensing authority’s fee structure. Hackney carriages and private hire vehicles are still licensed on a twelve-month basis.

A private hire vehicle is not required to have a meter, but if one is installed it must be checked and sealed by the council. Large numbers of base operations utilise satellite-based computerised GPS systems and dataheads in the vehicles which dispatch jobs and track the vehicles’ whereabouts; many of these also incorporate a booking app for customers. Other operator costs may include office premises, planning permission, telephone lines, employee/public liability insurance and vehicle/office signage where permitted.

The financial arrangement made with the operating centre varies greatly, but most often a weekly fee ("settle" or radio rental) is paid by the private hire driver to the operator in exchange for receiving fares; as outlined in 'Market' above, this again can vary greatly around the country. The decision rests with the driver as to whether he wishes to maintain his own vehicle and pocket all cash fares, or to run a company-maintained vehicle and receive a percentage of the takings.

Apart from the vehicle and the fuel to run it, the major expenditure for any taxi or private hire driver is the appropriate insurance. In recent years insurance premiums have escalated in price, primarily dependent upon post codes of the area from which the vehicle and driver works; so it is crucial at the outset for the driver to obtain quotations for the correct insurance policy for his/her type of work - even before they acquire the vehicle.

Historically the private hire and taxi industry was the only sector of road passenger transport without any kind of national training scheme for drivers. However, from 2003 candidates could obtain VRQ and NVQ qualifications for the taxi and private hire driver. Following a periodic Government education review, industry training programmes have recently been rewritten under the new Qualifications and Curriculum Framework. A similar review is due at any time, and no doubt the framework of the qualifications will change once again.

Currently there is a QCF Level 2 Certificate, “Introduction to the Role of the Professional Taxi and Private Hire Driver”, comprising nine compulsory units and tested by a third party examination. The underpinning knowledge gained from this Certificate enables candidates to go on to be assessed under the Level 2 NVQ in Road Passenger Vehicle Driving (Taxi and Private Hire). These qualifications are intended to be standardised across the country, portable, and give the best possible grounding for entry or continuance in the taxi and private hire industry. More information is obtainable from Transport Training Technology; see ‘Useful Addresses’.

Existing national legislation requires licensing authorities to license only those drivers who are deemed to be a "fit and proper person"; operators are required to demonstrate suitable competence, coupled with experience in the trade. Working for an existing operator should provide valuable insight into the realities of the trade, especially the local conditions, opportunities and constraints.

In London, hackney carriage licences are issued by, and vehicles are overseen by the Taxi and Private Hire division of Transport for London. Requirements are pretty similar nationwide: applicants for a hackney carriage licence typically must be 21 or over, of good character (a "fit and proper person"), able to drive a taxi competently and safely, and physically and mentally fit with a thorough knowledge of the area. These requirements necessitate both a medical and a criminal record check. Failure to disclose a criminal record during application can result in disqualification. As well as passing an examination on knowledge of local routes (in London the "Knowledge" for hackney licence applicants can take up to three years' preparation), prospective drivers must undertake a short driving test in most areas to demonstrate that they can drive a cab competently in the environment, and use the facilities provided to assist disabled passengers.

Applicants for a private hire driver's licence or taxi licence must have held a full UK DVLA or EU licence for twelve months, pass a medical, pass a local topography test in many areas, pass a taxi driving test in many areas, and undergo a Disclosure and Barring Service (DBS) record check. Additionally the local police check to see if there is anything notated as local evidence. Despite assurances from the DBS that the applicant’s record check will take no longer than three weeks, prospective drivers are warned to make applications well in advance of the time they wish to commence work.

Further information on national developments in driver training, national qualifications and industry training generally can be obtained from Transport Training Technology.

Further Reading

"Private Hire and Taxi Monthly"
National Private Hire Association
(0161) 280 2800

"Put Yourself in the Driving Seat"
Transport for London/London Taxi and Private Hire
(0845) 602 7000

Useful Addresses

National Private Hire Association
c/o 7 Old Green
Greenmount
Bury, Lancs, BL8 4DP
Tel: (0161) 280 2800
donnadale.npha@btconnect.com

National Taxi Association
c/o Administration Office
Infirmary Street
Newtown, Carlisle
Cumbria CA2 7AN
Tel: (01228) 598740
secretary@national-taxi-association.co.uk

The Transport Academy Ltd
8 Silver Street
Bury, Lancs BL9 0EX
Tel: (0161) 280 3223
donnadale123@yahoo.co.uk

Transport for London Taxi and Private Hire
Palestra, 4th Floor
197 Blackfriars Road
London SE1 8NJ
Tel: (0845) 602 7000
TPH.Enquiries@tfl.gov.uk

Transport Training Technology Ltd
57 Blacketts Wood Drive
Chorleywood
Hertfordshire WD3 5PY
Tel: (01923) 282241
iona.copley@treble-t.com

Prepared by:
The National Private Hire Association