London Assembly calls for urgent powers from Government to BLOCK cross-border taxi and PHV hiring in licensing reform response
- Perry Richardson
- Mar 20
- 3 min read
The London Assembly Transport Committee has urged the Government to legislate for stronger controls on cross-border taxi and private hire vehicle (PHV) operations, warning that current proposals risk failing to address one of the industry’s most persistent structural challenges.
In a formal submission to the Department for Transport’s consultation on local transport authorities and taxi and PHV licensing, the Committee said it “want[s] to see urgent action taken on cross-border hiring”, describing the issue as a central weakness in the existing regulatory framework.
The consultation itself is focused on transferring licensing responsibilities to local transport authorities across England. While these changes would not directly alter London’s system, where Transport for London (TfL) already acts as the licensing authority, the Committee stressed that national policy decisions have a disproportionate impact on the capital.
London is home to around a third of England’s taxi and PHV drivers, meaning regulatory inconsistencies elsewhere can significantly affect market conditions in the city. The Committee warned that “longstanding regulatory gaps have significant implications for London’s taxi and PH sector”.
Committee warns VAT changes and regulatory gaps risk higher fares, lower driver earnings and weakened standards in capital
At the centre of the Committee’s concerns is the practice of cross-border hiring, which allows drivers licensed by authorities outside London to undertake bookings within the capital. The Committee said this “undermin[es] licensing standards in London” and contributes to wider operational pressures including congestion and reduced driver earnings.
The issue has been a recurring point of tension between TfL and other licensing authorities, particularly those with lower licensing costs or differing vehicle and driver standards. The Committee’s latest intervention signals continued concern that without national reform, disparities between regions will continue to drive drivers into London during peak demand periods.
The letter also highlights the impact of recent VAT changes introduced from 2 January 2026, which alter how tax is applied to taxi and PHV services. The Committee warned these changes “risk creating an uneven playing field between London-licensed drivers and those licensed elsewhere (but working in London)”.
This divergence is partly due to TfL’s licensing rules, which prohibit the agency model used by some operators outside London. As a result, drivers working cross-border may be subject to different tax arrangements, potentially allowing them to offer lower fares while maintaining margins.
The Committee cautioned that the consequences could be twofold, stating: “We fear this will result in higher fares in London alongside squeezed incomes for TfL-licensed drivers.” For operators and drivers based in the capital, this raises concerns over competitiveness and long-term viability.
Beyond pricing impacts, the Committee linked cross-border hiring to broader structural issues in the market. It said the practice is “exacerbating issues with the number of PH drivers in London, including longstanding concerns about congestion and driver income”. These pressures have been widely documented in recent years, particularly as the number of licensed drivers has fluctuated in response to demand and regulatory conditions.
Despite the Government indicating it is considering options around out-of-area working, national standards and enforcement, the Committee argued that more decisive legislative action is required. It has called for TfL to be granted explicit authority to prevent cross-border hiring as part of wider reforms.
In its formal recommendation, the Committee stated: “As part of the changes to legislation to make all local transport authorities in England responsible for taxi and private hire vehicle licensing, the Government should legislate to grant TfL the power to stop cross-border hiring.”
The submission builds on earlier correspondence between the Committee and the Government following its 2025 investigation into TfL’s Taxi and Private Hire Action Plan. That work also raised concerns around data sharing, enforcement capability and financial support for the sector.
The Department for Transport’s current consultation is primarily focused on the cost implications of shifting licensing responsibilities. However, the Committee’s response indicates that industry stakeholders in London are looking beyond administrative reform, seeking measures that address competitive balance and regulatory consistency across regions.
A Government response to the Committee’s submission has been requested by 13 May 2026. The outcome is likely to be closely watched by operators, drivers and licensing authorities across England, particularly those affected by cross-border working.
