ADDRESSING CROSS-BORDER: Why the Government must now fix the cracks in the broken taxi and PHV system

The issue of cross-border licensing within the taxi and private hire vehicle (PHV) sector remains one of the most contentious and unresolved problems in the industry today. The licensing system as it stands allows drivers to obtain a licence in one local authority and then operate extensively in another, often with significantly different standards. This has created an uneven playing field for operators, reduced confidence among passengers, and left local licensing bodies unable to regulate effectively.

The Department for Transport (DfT) has come under renewed pressure following the announcement of a new inquiry launched by the Transport Committee. The inquiry will examine the current framework of taxi and PHV licensing in England, with cross-border operations one of the key issues on the table.

A fragmented system

At the heart of the matter is the Local Government (Miscellaneous Provisions) Act 1976, which governs private hire licensing outside London. The law does not prevent a driver licensed in one area from operating in another, provided that the vehicle, driver and operator are all licensed by the same authority. This has resulted in a sharp rise in drivers choosing to licence with authorities that offer faster processing, lower fees, or fewer entry requirements.

Perhaps the most high-profile example of this is the City of Wolverhampton. In recent years, the council has issued tens of thousands of taxi and PHV licences, with the vast majority of recipients living and working far beyond the council’s boundaries. Data shows that Wolverhampton licenses around 96% of drivers who do not live in the area. Greater Manchester alone has around 9,000 drivers licensed by Wolverhampton.

The result is a system that creates confusion and inconsistency. A local authority might impose high safety standards, conduct regular inspections, and enforce driver training, only to find that the majority of drivers working in its area are licensed elsewhere and not subject to the same conditions.

Impacts on enforcement and public trust

Local licensing authorities are responsible for ensuring safety, enforcing regulations, and handling complaints within their areas. However, when drivers are licensed by distant councils, local enforcement teams are often powerless. They have no jurisdiction to suspend or revoke licences issued by other authorities, and complaints may be redirected to licensing offices hundreds of miles away, which can lead to delays or inaction.

Join us on WhatsApp here

For passengers, especially those considered vulnerable, the lack of consistent national standards is a growing concern. Disabled passengers, women travelling alone, and children using PHV services for school transport must rely on the assumption that their driver meets the same standards wherever they are. But this is often not the case.

The Government has taken some limited steps to increase transparency. One such measure is the National Register of Licence Revocations and Refusals (NR3), a database designed to help licensing authorities share information about drivers who have had licences refused or revoked. However, this tool is not compulsory and has not resolved the issue of enforcement where cross-border working is concerned.

Industry voices and political response

Many within the taxi trade have called on the Government to introduce minimum national standards and close the legal loopholes that enable cross-border licensing to undermine local regulation. Trade groups have criticised the disparity in standards between authorities and the lack of enforcement against drivers who use licences obtained under relaxed conditions to work elsewhere.

Some local authorities, particularly those in urban areas with tight regulations and high demand, have pushed for legislation that would allow councils to control who operates within their area. Proposals include powers for local authorities to restrict the number of out-of-area drivers or to introduce mandatory local topographical and language tests for anyone operating within their borders, regardless of licensing origin.

The Transport Committee’s ongoing inquiry has presented an opportunity to revisit these issues. It aims to explore how best to align licensing conditions across different authorities and whether the Government should intervene to introduce a standard framework. As part of its remit, the committee is seeking views on the scale of cross-border operations and the effectiveness of existing legislative tools.

What needs to happen next?

A growing number of industry stakeholders believe that national licensing standards are now unavoidable. Without action, councils with strict requirements and robust enforcement will continue to be undermined by neighbouring or distant authorities offering a faster or easier path to a licence.

To level the playing field, the Government could establish a national licensing regime that sets a basic standard for all local authorities to meet or exceed. This would include requirements around driver background checks, English language skills, vehicle safety standards and environmental compliance.

Further reform could also include a system of operational restriction, where drivers are only permitted to operate predominantly in the area where they are licensed, with the ability for councils to challenge excessive cross-border activity.

The Transport Committee inquiry is set to conclude later in 2025, and if its recommendations are not followed by real reform, the cross-border licensing problem will continue to damage public confidence and diminish the ability of councils to protect passengers.