Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more


  • Comment
A study into the UK licensed taxi services market, worth over£2bn, ...
A study into the UK licensed taxi services market, worth over£2bn,

has been launched by the Office of Fair Trading.

The study will look at the impact of existing regulations on the

market for licensed taxis, examine how well the market is working for

consumers and consider whether any action is necessary to improve

competition in the market.

The main focus of the OFT's study will be the restrictions imposed by

many local authorities on the number of taxi licences issued. The

study will also consider other aspects of licensed taxi regulation -

local authorities can also place qualitative restrictions on service


The number of taxi licences is currently restricted in almost half

(45 per cent) of local authorities in England and Wales. The study

will compare experiences between local areas where regulations differ

to help assess how regulations affect the overall quality of service

available to passengers.

John Vickers, director general of fair trading, said:

'This is a large and growing market, which is highly regulated. We

want to be sure that regulation strikes the right balance, so that

passengers have the protection they need while reaping the benefits

of effective competition.'

The study follows preliminary work and discussion with interested

parties. It will be carried out by the OFT's Markets and Policy

Initiatives Division and will report in Summer 2003. A short

background paper is available on request.


Regulations in England and Wales (outside London)

The secretary of state for transport is responsible for the broad

policy (through primary legislation) but local district and borough

councils administer the licensing laws.

Councils have a wide range of powers, e.g. assessing the fitness of

drivers and vehicles to be licensed, setting fares and creating taxi

stands. Since 1985 local authorities have been required to satisfy

themselves that there is no unmet demand for taxi services before

refusing any licence on the ground that limits on taxi numbers have

been met.

Regulations in London

The secretary of state for transport is responsible for the broad

policy (through primary legislation). Administration of the licensing

laws is the responsibility of Transport for London (part of the

Greater London Authority).

Since 1931, there has been no limit on the number of taxis licensed

in London. However both drivers and vehicles are required to be 'fit

and proper'. For drivers, this means they must pass 'the Knowledge'

test, as well as satisfying other legal conditions as to age,

character and health. Vehicles must comply with the Conditions of

Fitness set by Transport for London.

Two types of taxi driver licence are available in London - (1) a

'green badge' that allows the driver to operate anywhere within the

Metropolitan Police District (and the City of London) and (2) a

'yellow badge' that restricts the driver to specified suburban areas.

Regulations in Scotland

In Scotland local licensing authorities havepowers over all aspects

of taxi licensing including specifying taxi design, fixing taxi fares

and limiting the number of taxis licensed. The Scottish executive has

reserve powers to impose vehicle design specifications on a licensing

authority, but these have not been used. The Scottish executive has

devolved powers to legislate on taxi licensing.

In Edinburgh and Glasgow only purpose-built black cab style taxis are

permitted for general hire. However, in Edinburgh an 'airport

licence' exists which means only saloon style taxis can pick up from

the airport but cannot accept any other hires. Black cabs can take

customers to the airport but cannot pick up from the airport. All

other areas of Scotland have a saloon or mixed fleet of taxis.


1. Private hire vehicles (PHVs, commonly known as minicabs) are not

directly the subject of this study. They are not subject to quantity

controls, comply with less stringent 'fitness of vehicle' tests and

do not have fares fixed by the licensing authority. Unlike taxis,

hiring a PHV must be organised in advance. Therefore only taxis can

ply for hire on the street.

2. The markets and policy initiatives division of the OFT conducts

around five full studies a year. Possible outcomes include:

- enforcement action by the OFT's competition and consumer

regulation divisions

- a reference of the market to the Competition Commission

- recommendations that the government consider changes in laws and

regulations and to regulators, self-regulatory and other bodies to

consider changes to their rules - the government has agreed (in its

White Paper 'Productivity and Enterprise: A World Class Competition

Regime') to publish a written response within 90 days

- campaigns to promote consumer education and awareness

- a clean bill of health.

3. The markets and policy initiatives division, which is headed by

Jonathan May, complements the competition and consumer regulation

enforcement divisions. It takes a broader perspective in reviewing

markets that could work better for consumers. The division has three


MPI1 - provides the central resource of specialist economic,

statistical, and financial analysis advisors

MPI2 - is responsible for the OFT's enhanced role in investigating

markets that might not be working well for consumers but where

competition or consumer regulation enforcement action does not

appear to be the immediate answer

MPI3 - co-ordinates with government, other organisations (both

national and international) involved in consumer protection and

competition matters, manages a public information line on matters

within the OFT's responsibilities, and handles preparations for OFT's

role as regulator of payment systems.

4. In this press release the functions of the director general of

fair trading (DGFT) under the Act are for simplicity described as the

functions of 'the OFT'.

  • Comment

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions.

Links may be included in your comments but HTML is not permitted.