The economic impact of licence shopping on councils with stricter taxi and private hire policies
- Perry Richardson
- 8 minutes ago
- 2 min read
Councils that have chosen to impose higher standards on taxi and private hire licensing are reporting financial and operational pressures linked directly to “licence shopping”. This practice sees drivers and operators bypassing tougher rules by applying in neighbouring areas with lower thresholds, while often continuing to work in the stricter borough.
Newcastle-under-Lyme Borough Council provides a clear example. Since adopting a more rigorous taxi licensing policy in 2019, the authority has seen its number of licensed drivers fall by nearly half, with similar reductions in hackney carriages and private hire vehicles. While the council argues the changes were necessary to improve safeguarding, the drop has had financial consequences. Fewer drivers mean reduced income from licence fees, which previously supported enforcement and compliance operations.
The financial strain is not limited to falling revenue. Enforcement costs rise as councils must monitor out-of-area vehicles and drivers who continue to operate locally under weaker standards. The mismatch creates tension, as councils bear the responsibility for safety within their boundaries but have limited control over licences issued elsewhere.
There are also broader economic effects on the trade. Local drivers who comply with higher standards face higher costs and tougher entry conditions. At the same time, those licensed under lighter regimes can operate in the same markets, often at a competitive advantage. This undermines the principle of a level playing field and risks driving compliant operators out of business.
The situation is creating pressure on councils to reconsider their own policies. Some authorities report that applicants openly state their preference to apply elsewhere if faced with stricter local requirements. This leaves councils in a difficult position: maintain higher standards and accept economic decline in the licensed trade, or lower standards to retain numbers but compromise on safeguarding.
The Government’s Transport Committee inquiry is now taking evidence on these issues, with calls from local authorities and trade groups for national minimum standards. Without such reform, councils acting responsibly may continue to face financial losses while also being left to police vehicles and drivers they did not licence.
The economic cost of licence shopping therefore stretches beyond balance sheets. It affects enforcement capacity, the competitiveness of compliant drivers, and public confidence in the system. Many within the industry are warning that unless consistency is introduced nationwide, the pressures on both trade and regulators will continue to grow.
