CAPPING NUMBERS: Should licensing authorities be allowed to cap both taxi and private hire vehicle numbers?

The question of whether councils in England should be given powers to limit the number of private hire vehicle (PHV) licences they issue has become one of the most debated topics in the taxi and private hire industry.

With driver earnings under pressure, congestion increasing in many urban areas and concerns over regulatory oversight growing, calls for local authorities to gain the power to cap PHV numbers have become louder.

Yet while the principle of allowing licensing authorities to control vehicle numbers appears attractive to many within the trade, the reality is considerably more complicated. Any system allowing local councils to introduce numerical caps would almost certainly fail unless national cross-border licensing rules are fundamentally reformed first.

TaxiPoint has consistently examined both sides of the debate over the years, with the evidence increasingly pointing towards one conclusion. Licensing authorities should have the option to cap numbers where there is a demonstrable local need, but only alongside legislative changes that prevent operators and drivers simply obtaining licences elsewhere before working predominantly in another authority.

For many drivers, particularly in larger cities, the argument for capping numbers centres on economics and job viability. Private hire vehicle numbers have expanded dramatically over the last decade, largely driven by app-based operators making market entry easier than ever before. As more drivers compete for the same passenger demand, individual earnings inevitably come under pressure.

In London alone, the number of licensed private hire drivers more than doubled over a relatively short period following the rapid expansion of ride-hailing platforms. Similar trends have been seen across other major cities where licensing authorities have experienced sustained growth in both driver and vehicle applications. Critics argue that unrestricted expansion creates diminishing returns for drivers while increasing congestion and reducing profitability across the sector.

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However, unlike the hackney carriage trade, where many authorities already have powers to restrict taxi licence numbers under certain circumstances, private hire licensing in England operates within a completely different legal framework.

Current legislation allows a driver, vehicle and operator licensed by one authority to undertake pre-booked work almost anywhere in England and Wales, provided the booking complies with the existing “triple licensing” requirements. This has led to significant numbers of vehicles being licensed in authorities many miles away from where they actually spend most of their working lives.

The growth of cross-border licensing has become one of the defining regulatory issues facing the industry. Licensing authorities have expressed frustration that they have limited influence over vehicles working daily within their boundaries but licensed elsewhere. Equally, enforcement officers often have restricted powers over vehicles that fall outside their own licensing jurisdiction.

This is precisely why Transport for London (TfL), despite acknowledging concerns around the growth of private hire numbers, has consistently argued that vehicle caps cannot be considered in isolation.

Giving evidence to MPs and responding to recommendations from the London Assembly, TfL stated that granting authorities powers to cap vehicle numbers would not deliver “meaningful change” under the current legislative framework because drivers could simply obtain licences from neighbouring authorities and continue working in London.

TfL has repeatedly maintained that reform of cross-border hiring remains its primary legislative priority, and rightly so.

Responding to recommendations that London should receive powers to cap PHV numbers, TfL said addressing cross-border hiring was “more pressing” because “without being addressed, would make any powers to cap private hire vehicle numbers ineffective”.

Instead, TfL continues to advocate for what has become known as a “Journey Start or End Rule”. Under this proposal, every private hire journey would either have to begin or end within the licensing authority where the driver, operator and vehicle are licensed. Such a system would significantly reduce long-term out-of-area working while still allowing genuine cross-border journeys to continue.

TaxiPoint’s own analysis has similarly concluded that introducing local licensing caps without addressing cross-border working would simply shift licensing activity elsewhere rather than reduce the actual number of vehicles operating within an area. Authorities choosing to limit licences could even find themselves with less regulatory control over vehicles working locally as more drivers sought licences from neighbouring councils.

The debate also extends beyond driver numbers alone. Local authorities argue that unrestricted licensing can affect congestion, environmental objectives and transport planning. If councils have responsibility for managing local transport networks, some argue they should also have greater influence over the size of the licensed fleet operating within them.

Conversely, national operators have generally favoured maintaining flexible licensing arrangements, arguing that passengers benefit from greater vehicle availability and shorter waiting times. Restricting vehicle numbers could reduce service levels during peak periods unless carefully managed.

The industry has consistently been told that the PHV sector is a free market and market conditions should manage the the number of drivers licensed. That is hugely debatable.

Scotland provides an interesting comparison. Licensing authorities there already possess powers to restrict taxi and private hire licence numbers where justified. However, Scotland operates under a different legislative framework, making direct comparisons with England difficult. However, simply copying Scottish licensing powers into England without changing cross-border rules would create significant unintended consequences because English licensing boundaries function very differently.

There is also the practical challenge of deciding how any cap would be determined. Would authorities base limits on population size, passenger demand, congestion levels, environmental targets or driver earnings? Any methodology would almost certainly become contentious, with regular reviews required as travel patterns changed.

The issue remains prominent as the Government continues work on wider taxi and private hire reform. National minimum standards, changes to cross-border licensing and stronger enforcement powers are all being discussed alongside wider legislative changes.

For many within the industry, these reforms are closely connected rather than separate debates. A licensing cap without cross-border reform risks becoming little more than an administrative exercise. Cross-border reform without stronger local control may still leave authorities struggling to manage transport provision effectively.

The strongest case emerging from both industry analysis and TfL’s own position is not necessarily for mandatory caps everywhere, but for giving licensing authorities the ability to introduce them where local evidence supports doing so. That flexibility could allow councils experiencing genuine oversupply to respond to local conditions, while authorities with stable markets could continue operating without restrictions.

Ultimately, numerical caps alone are unlikely to solve the challenges facing the private hire sector. But combined with meaningful reform of England’s cross-border licensing rules, they could become a valuable regulatory tool for authorities seeking to balance passenger demand, driver livelihoods and effective local oversight. Until that legislative foundation is addressed, however, any attempt to control vehicle numbers is likely to remain vulnerable to being bypassed by the very licensing system it is intended to regulate.

Should local authorities be allowed to cap numbers? Yes. Will the Government ever allow it? Not likely.