The London taxi trade is often the first to feel the impact of changes or trends that go on to affect the industry on a national level.
Some of the most notable shifts in recent times include cabbies successfully adopting electric vehicle technology and also being the first to harness taxi apps like Hailo, way before Uber set foot on UK shores. That said, there are some hugely important decisions to be made away from the capital in 2023 that could help shape the future of the industry in London and beyond.
Sefton Council versus Uber Court Case
A major court hearing began in November 2022, with ride-hailing giants Uber raising a case against Sefton Council, which could potentially change the business models of every private hire vehicle (PHV) operator in England.
If Uber is successful, the changes could force contractual arrangements with drivers and make all PHV operators the 'principal' for VAT on fares. This is likely to force the price of journeys up by at least one fifth.
Since losing a long running battle centring around workers’ rights in London, Uber has been forced to make big changes to its business model. The Supreme Court’s ruling in that case stated that the operator was 'the principal', which had implications for tax purposes, specifically that VAT was payable on journeys. As a result, in March 2022, Uber applied VAT to bookings and has since urged thousands of other private hire operators in London to do the same.
Transport for London (TfL), the UK’s biggest licensing authority, also told minicab operators to take ‘immediate action’ to ensure they were compliant, by making changes to their terms and conditions and operating models.
With this new case, Uber is now looking to level the playing field in the sector as whole, by asking a question that would force all operators around the country to pay VAT on all journeys made.
How could this affect a London taxi driver?
Since Uber was forced to pay VAT, their London prices have escalated fast. High inflation and basic workers’ rights have also pushed prices above what their customers expect to pay. As a result, people have shopped around and found black cabs to be a viable (and better) option once more. We are seeing more demand on our end as a result.
If Uber wins its case against Sefton Council, then London is effectively protected from minicab operators licensed outside of TfL, as the same rules will apply to everyone around the country and it won’t matter where you are licensed.
If the courts find for Sefton Council, then it opens up the opportunity for operators licensed outside of London to work ‘cross border’ in the capital without paying VAT and offering cut price fares. This could push the prices down significantly in London once more and could see less loyal customers shop-around again.
We await the court’s decision, which is due imminently.
Taxi and PHV Best Practice Guidance
Last summer, the Government ran a 12-week consultation to update vital Taxi and PHV guidance supplied to licensing authorities to help them more effectively regulate the industry, in response to new digital ways of working, following the boom in ride-hailing services.
A bucket load of new recommendations were made by the Department for Transport (DfT), covering pretty much every hot topic impacting the sector right now. They range from enhanced driving standard requirements to better signage on taxis.
Taxi drivers in London will be showing great interest in licensing points focusing on the identification of both taxi and minicab vehicles. Driver proficiency and training will also be scrutinised and seen as an opportunity to bring back enhanced driving tests and disability awareness training.
How could this affect a London taxi driver?
Some of this may seem like more red tape when it comes to licensing and more hoops to jump through like mandatory awareness courses to be completed. Effectively, yes, it may mean more time and money, but there are positives too. The Government has also suggested making taxis more visible and distinctive, whilst simultaneously making PHVs less visible. The draft guidance proposes a revamp of taxi and PHV signage to help the public better identify taxis.
Things to watch
It’s important to keep an eye on what’s going on in our industry both locally and nationally. Some other things I am watching with interest to see how they play out, include wireless electric taxi charging trials in Nottingham, new artificial intelligence (AI) police cameras in the South West that capture drivers using mobile phones, and mandatory CCTV policies being introduced in regions across the UK. I will cover these in more detail in upcoming columns for TAXI.