Sadiq Khan urges extension of vehicle payment deferrals to help taxi drivers keep hold of their cabs

Image credit: LEVC

The London Mayor has written to the Chancellor Rishi Sunak days before the eagerly anticipated Budget to call on him to extend payment deferral for vehicle finance agreements to help taxi and private hire drivers keep hold of their vehicles.

In March last year black cab drivers were handed the opportunity to take a three-month finance payment holiday, which was designed to ease the burden. As the pandemic progressed this offer was eventually extended by another three-months.

Despite the six-month payment holiday, taxi drivers have continued to struggle financially.

Since 2018 taxi drivers in London have invested over £200million in nearly 4,000 Zero Emission Capable (ZEC) black cabs. Monthly payments for the ZEC taxi and insurance can cost cabbies around £1,200 each month, at a time when work levels are at a record low due to COVID restrictions.

The letter sent to the Chancellor, Rishi Sunak, has been co-signed and supported by taxi and private hire trade groups, plus vehicle manufacturers including LEVC and Dynamo Motor Company.

In the letter to the Chancellor, the Mayor of London writes: “The taxi and private hire trade in London, and across the country, continues to suffer extreme financial hardship, as do many other self-employed people. As we begin to look to restart the economy fully, it is vital that those who are self-employed have the resources they need to tide them over until they are able to resume regular trading again. I wrote to you about this matter earlier this year. This letter provides practical suggestions which I hope will have a more positive response.

“Many taxi and private hire drivers lease their vehicles or purchase them on finance. While they were able to take advantage of six-month payment deferral for motor finance agreements over spring and summer 2020, since September many drivers have now accumulated significant debt, as payments have been required even while their revenue remains suppressed. Many drivers are now at risk of losing their vehicles, as the Financial Conduct Authority (FCA) ban on repossessions came to an end on 31 January. This is of course not in drivers’ interest, but it is also not in the interest of the lenders, given the limited value that repossessed vehicles would bring at auction, and the significant uncertainty facing the market at this time.

“I understand that the Finance and Leasing Association (FLA) have been in discussion with Treasury officials in the Banking and Credit team regarding a proposal to enable the FLA to extend full or partial payment deferrals until such a time as drivers have started to recoup their lost income. Depending on the progress of the vaccination programme and the emergence from lockdown restrictions, this could be in summer 2021. Your officials will have the full details of this proposal, but I understand that it would not require immediate funding from the Treasury – only that consideration be given to allowing the offset of funders’ losses.

“I and the undersigned industry leaders urge you to consider this proposal. The taxi and private hire trade plays an important role in our transport network and services will be necessary as Londoners begin to emerge from lockdown and travel becomes more frequent in due course. In London we have also made significant progress in growing the size of our low- and zero-emission fleet, which is at risk of being seriously eroded if drivers do not have the financial support needed to see them past these final hurdles.”