TfL funding challenges dominate debate on future of London’s taxi and private hire sector
- Perry Richardson
- Jun 21
- 4 min read
Updated: Jun 23
As Transport for London (TfL) faced questions to improve oversight and support within the taxi and private hire industries, one area of discussion at the recent London Assembly Transport Committee session turned sharply towards the issue of funding. While much of the public debate focuses on regulation, enforcement and licensing delays, underlying financial constraints are shaping what TfL can and cannot do to support drivers, fleet upgrades and infrastructure.
Assembly Members raised multiple questions around how TfL might unlock or redirect funding to address urgent sector needs, particularly around driver support, vehicle affordability and accessibility.
Plug-in Taxi Grant and VAT relief
A significant portion of the discussion centred on the future of the Plug-in Taxi Grant (PiTG) and VAT exemptions for wheelchair accessible vehicles (WAVs).
TfL confirmed that both remain part of its lobbying efforts to central government. The PiTG provides financial support for drivers purchasing zero-emission capable taxis, currently up to £7,500 per vehicle. Officials said they continue to press for the scheme to be extended beyond its scheduled wind-down and argued it plays a vital role in keeping fleet transition financially viable.
Alongside this, TfL is calling for WAVs—both taxis and private hire vehicles—to be made zero-rated for VAT purposes. Officials maintained that such an exemption would significantly lower the entry cost for new vehicles and support operators offering accessible transport. This ask is being positioned not only as a green policy but as a matter of equity for disabled passengers and a means of increasing the accessible fleet.
However, Members pointed out that both the VAT exemption and PiTG face the same legislative and Treasury hurdles as other policy asks. Assembly Member Russell questioned why TfL continues to pursue these funding changes while dropping other priorities such as capping powers, despite similar levels of resistance from Government.
TfL responded that there remains a logic in continuing to lobby for affordability-based support, as these requests are often better aligned with broader national objectives on air quality, electrification and accessibility. But Members appeared unconvinced that Government appetite differed significantly between asks, calling for more transparency in TfL’s funding strategy.
Green Finance Fund
Assembly Members pressed TfL on whether alternative sources of capital could be used to help address current cost pressures on drivers—particularly the Mayor’s Green Finance Fund.
Assembly Member Prince suggested that the Green Finance Fund could be used to refinance or subsidise the high cost of new zero-emission taxis. The LEVC TX vehicle, now the dominant licensed taxi in London, can cost close to £100,000 once finance is factored in. Prince pointed out that with no real alternative manufacturer currently in the market, drivers face an effective monopoly on supply.
TfL said it had not yet explored using the Green Finance Fund for this purpose, noting that a previous £50 million de-licensing scheme funded by the Mayor and TfL had already supported many drivers switching to cleaner vehicles. Officials confirmed that no new grant programme is currently planned and that affordability remains an issue being raised with government, rather than through direct TfL subsidy.
Assembly Members suggested that, at a minimum, TfL should assess whether the fund could be adapted or expanded to support taxi drivers with the cost of cleaner vehicles—particularly given the public service nature of the trade and its accessibility requirements.
FREENOW model and operator support
During the session, Members also referenced the model being pursued by app-based operator FREENOW, which has funded driver training for the Knowledge to help expand the number of licensed taxi drivers in London. TfL welcomed this initiative and said it would be open to working with other operators or stakeholders on similar schemes. However, officials said that TfL itself does not currently have the financial ability to replicate such a programme or subsidise training costs directly.
The Knowledge remains one of the most demanding entry barriers in the UK taxi industry, both in terms of time and cost. TfL confirmed that while it has reviewed and published more accessible guidance and materials, the licensing fee structure itself still does not reflect the full cost of delivering the process. In effect, TfL is already subsidising Knowledge-related costs through its wider licensing system.
Assembly Members called for a more structured look at how private and public sector funding might be combined to support driver training, either through discounted fees, direct grants or employer partnerships.
Support for welfare and infrastructure
The question of funding also extended to driver welfare. Assembly Member Russell raised the possibility of using the Green Finance Fund to support the creation of rest hubs and facilities for private hire and taxi drivers—particularly those working long hours without access to secure restrooms, food or seating.
TfL said that this type of infrastructure support is currently being examined through a forthcoming private hire taskforce, but made no commitment to using the Green Finance Fund for this purpose. Officials did acknowledge that driver welfare is an increasing concern and would be considered in policy development.
While TfL maintains that funding support remains a key pillar of its long-term plan for the sector, the committee session made clear that existing resources are limited, and much of TfL’s strategy relies on lobbying rather than immediate delivery. Assembly Members pushed for a more proactive approach—either by seeking new uses for existing funds such as the Mayor’s Green Finance Fund, or by collaborating with operators and stakeholders to develop co-funded solutions.
For now, drivers facing high vehicle costs, licensing uncertainty, and limited rest facilities are being asked to wait on future announcements. Whether that is sustainable in a sector already under strain remains to be seen.
