GOVERNMENT LEVEL CHANGE NEEDED: Cross-border hiring loophole is BLOCKING London minicab cap, warns Deputy Mayor of London
- Perry Richardson
- 2 hours ago
- 4 min read
Efforts to introduce a cap on private hire vehicle numbers in London are being undermined by long-standing cross-border hiring rules, according to transport officials, who say the issue must be resolved before any meaningful limits can be enforced.
At a recent session of the London Assembly Transport Committee, Deputy Mayor of London Seb Dance made clear that the current system renders local caps ineffective. “The problem with the cap is that whilst you have the cross-border issue, cap is essentially meaningless,” he told Assembly Members.
Under existing legislation, private hire drivers can be licensed by one local authority but carry out journeys in another. In practice, this has enabled a significant number of drivers licensed outside London to operate predominantly within the capital, without being subject to Transport for London’s specific regulatory standards.
This legal framework stems from national legislation governing private hire vehicles, which allows operators to accept bookings across authority boundaries as long as the driver, vehicle and operator are all licensed by the same authority. While originally intended to provide flexibility for pre-booked journeys, the system has evolved alongside app-based platforms, enabling large-scale cross-border working.
Regulatory gap allows out-of-area drivers to operate freely in the capital, undermining enforcement and market controls
TfL Commissioner Andy Lord told the committee that this has become a “real concern” for both safety and market fairness. He warned that vehicles operating in London may not meet the same requirements as those licensed by TfL, including standards related to vehicle age, emissions and driver vetting.
“It’s potential that there’s vehicles in London that aren’t to the same specification and safety requirements as London licensed vehicles,” Lord said, adding that such drivers are “plying in an area where they weren’t actually licensed or regulated”.
TfL has limited powers over drivers and vehicles licensed outside its jurisdiction, making it difficult to take action against non-compliance or poor practice when it occurs within London.
This lack of control has direct implications for any proposed cap on PHV numbers. Even if TfL were granted powers to limit the number of licences it issues, drivers licensed in other parts of England could continue to enter and operate in the London market, effectively bypassing the restriction.
Dance indicated that this dynamic makes cross-border reform a prerequisite for wider regulatory change. “We really do have to seek to have action on the cross-border issue,” he said, noting that only after this is addressed could measures such as caps be meaningfully considered.
Transport for London has been lobbying the Department for Transport (DfT) for changes to the current system. Proposed reforms are expected to be included within the government’s English Devolution Bill, although the precise scope of those changes remains under discussion.
Lord suggested that one potential approach would involve restricting drivers to operating primarily within the area in which they are licensed. “If a city elsewhere or licensing authority elsewhere in the country licenses a vehicle, it is primarily to be used in that licensing authority’s area,” he said.
However, he acknowledged that any new framework would need to retain a degree of operational flexibility. For example, drivers undertaking long-distance pre-booked journeys into London would still need to be able to complete those trips legally, raising questions about how enforcement boundaries would be defined.
The scale of cross-border activity is not fully quantified, but industry stakeholders have consistently raised concerns that it is contributing to oversupply in the capital. With over 100,000 licensed private hire vehicles already operating in London, additional vehicles entering from neighbouring authorities are seen as further intensifying competition.
This has implications for driver earnings as well as congestion. TfL has previously warned that an oversupply of vehicles risks reducing income levels, as more drivers compete for a finite pool of passengers. Cross-border hiring adds another layer of complexity, as it expands the effective size of the market beyond TfL’s control.
The issue has also become a point of tension between different parts of the industry. London-licensed drivers and taxi representatives argue that they are subject to stricter and often more costly regulatory requirements, while out-of-area drivers can operate in the same market under different conditions.
At the same time, some private hire operators have defended cross-border flexibility as essential to maintaining service availability and meeting fluctuating demand, particularly during peak periods or major events.
The challenge lies in balancing these competing priorities while ensuring passenger safety and fair market conditions. Any reform is likely to require changes to primary legislation, making it dependent on government action rather than local decision-making.
The growing political focus on the issue, including its link to broader concerns raised in Baroness Casey’s review into exploitation and safeguarding, has increased pressure for reform. Ministers are now considering how best to standardise licensing and reduce inconsistencies across regions.
Until those changes are implemented, TfL’s ability to manage the size and structure of London’s private hire market will remain constrained. As Dance’s comments suggest, without closing the cross-border loophole, attempts to introduce a cap risk being ineffective in practice.
