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EXTRAS ON THE METER: Taxi fuel surcharges could make a comeback as diesel races towards £2 a litre
Emergency fuel surcharges could again become a feature of taxi fare structures across the UK as rapidly rising petrol and diesel prices place fresh pressure on drivers’ operating costs.
RAC figures published this week showed average petrol prices jumping to 170.54p per litre, the highest level since 23 August 2022, while diesel reached 192.86p per litre, its highest since 29 July 2022. The motoring organisation said average pump prices had risen by another penny in just 24 hours.
Government weekly road fuel data also shows how quickly costs have accelerated. Average petrol increased from 161.61p per litre in the week beginning 31 August to 168.14p by the week beginning 14 September. Diesel rose from 183.49p to 190.72p over the same period.
For cabbies covering significant daily mileage, sustained increases at this level can quickly alter the economics of a shift. Unlike most motorists, fuel is a direct variable operating cost, meaning a rise of only a few pence per litre can translate into a substantial additional monthly expense for a full-time driver.
Some licensing authorities have previously dealt with exceptional fuel volatility by building a separate fuel surcharge into their hackney carriage fare tables. Rather than permanently increasing the underlying mileage tariff, the mechanism allows an additional fixed amount to be charged per hiring when fuel reaches an agreed price threshold.
Blackpool Council operates one such structure. Its published system allows additional charges according to the prevailing price of petrol or diesel. For diesel, the surcharge starts at 30p when prices reach £1.50 per litre, increasing to 60p at £1.65, 90p at £1.80 and £1.20 at £1.95. Petrol has corresponding thresholds of £1.48, £1.63, £1.78 and £1.93.
On the latest RAC diesel average of 192.86p per litre, that type of structure would place fuel close to the upper end of Blackpool’s existing surcharge bands. Petrol at 170.54p would sit above its 60p threshold but below the 90p trigger. The precise surcharge applied in any area depends on the fare table legally adopted by that individual authority.
North Devon Council also has a fuel surcharge written into its hackney carriage tariff specifically to compensate drivers during periods of fuel-price volatility. Its system uses the Government’s weekly road fuel price data to determine whether the surcharge should apply during a particular week.
Other councils have used temporary fixed additions. During the sharp fuel-cost increases of 2022, Southend-on-Sea City Council consulted on a 40p fuel surcharge per journey for one year, or until a wider licensing review had been completed.
The attraction for licensing authorities is that a properly designed fuel mechanism can provide a more responsive way of dealing with exceptional price movements than repeatedly reopening the complete taxi tariff. A threshold-based arrangement can increase or remove the extra as fuel prices move, provided the mechanism has already been incorporated into the legally adopted table of fares.
Where no such provision currently exists, councils cannot simply instruct taxi drivers to add an unofficial amount to the meter. Under Section 65 of the Local Government (Miscellaneous Provisions) Act 1976, district councils can set hackney carriage fares and other charges through a table of fares. A variation requires publication of the proposed change and an objection period of at least 14 days.
That means authorities with an existing fuel-price trigger may be able to respond much more quickly than councils that first need to amend their fare structure.
The issue largely concerns hackney carriage fares because these maximum charges are controlled by licensing authorities. Private hire fares are generally determined commercially by operators rather than through the council’s hackney carriage tariff structure.
Fuel surcharges are also different from a conventional fare increase. A permanent tariff review usually changes flagfall, distance, waiting-time or other elements of the meter calculation. A fuel extra can instead be designed specifically as a temporary response to unusually high energy costs, with defined thresholds allowing the charge to fall away again if fuel prices retreat.
Some authorities have continued to develop the concept. Sheffield approved proposals in June 2026 for a fuel surcharge linked to prevailing fuel prices following requests from the hackney carriage trade as fuel costs increased. The authority subsequently received objections as part of the statutory process.
The latest fuel-price surge is therefore likely to bring greater debate to whether more councils should incorporate similar safeguards into future fare reviews, particularly where tariffs otherwise remain unchanged for long periods.
RAC head of policy Simon Williams said: “Average pump prices have jumped by yet another penny in just a day. Petrol has now broken through the £1.70-a-litre barrier and stands at 170.54p – its highest since 23 August 2022 – and diesel has risen to 192.86p – its highest since 29 July 2022. Unfortunately for hard-pressed drivers, prices look set to keep on rising due to the cost of a barrel of oil consistently trading over the $100 mark.
“Since the start of this month, the cost of filling a family car has already risen by almost £5, to £94 for petrol and £106 for diesel. So the pressure on the Chancellor to act to support households, so many of whom are dependent on the car, is building. Fuel duty is set to start rising from January but as we’ve said previously, there is a strong argument for leaving it at its current level, at least until the end of the Parliament.”
For the taxi sector, the immediate question will be whether the current rise proves temporary or develops into a sustained period of higher fuel costs.
Should diesel move beyond £2 per litre again, licensing authorities without a fuel-trigger mechanism may face renewed pressure from drivers and trade representatives for an interim fare response.
