The FIVE most pressing challenges facing the taxi trade right now

The taxi and private hire industry is managing a dense mix of regulatory change, rising costs and shifting technology. There’s lots also on the horizon when you think about autonomous vehicles and AI, but here are the five biggest current pressures shaping the UK trade today.

1) Cross-border licensing and uneven standards

MPs have launched a wide review of taxi and private hire licensing standards in England, with cross-border working, operator accountability and enforcement set to feature prominently. The inquiry is expected to look at whether today’s patchwork of rules still serves passengers and drivers in an app-driven market.

Out-of-area working continues to test local control. Data and case studies highlight how one authority can license drivers who predominantly work elsewhere, leaving enforcement gaps for the area where journeys take place. Recent coverage of enforcement activity linked to licences issued in Wolverhampton shows how scale can spill beyond council boundaries.

2) Licensing delays leaving drivers off the road

Two of the biggest licensing authorities are wrestling with backlogs. Reports this summer showed both the City of Wolverhampton Council and Transport for London carrying significant queues of applications and renewals, with temporary measures used to keep some drivers working.

In London, a High Court claim has now been lodged over private hire licence delays, seeking urgent remedies and wider system changes. The legal action highlights the impact on livelihoods when renewals stall.

3) Operating costs, insurance and thin margins

Running a cab remains expensive. Updated analysis this month set out the core costs facing drivers in 2025, from insurance and maintenance to tyres and finance. While private motor premiums have stabilised, taxi-specific cover remains much higher and continues to squeeze earnings alongside other inputs.

Cost pressures are also influenced by local road-user charging and policy decisions. Proposals to increase the London Congestion Charge and recent issues with incorrect penalties underline how compliance and appeals add time and expense for licensed drivers.

4) Electrification economics and charging access

The shift to cleaner vehicles depends on reliable, affordable charging. A recurring concern is the higher VAT on public charging compared to home rates, which raises costs for drivers without off-street parking. Industry pieces have detailed how the 20% VAT on public chargers, compared with 5% at home, distorts running costs and can deter adoption.

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Policy timetables also move. Clean Air Zone plans and local rules around age limits and emissions continue to evolve, affecting when fleets invest. Recent updates in Greater Manchester and other councils show how support schemes and deadlines can shift, impacting purchase and financing decisions for drivers.

5) Over-saturation of workers

The supply of drivers has outpaced demand in several cities, pressing down on earnings and lengthening idle time between jobs. London now counts over 100,000 licensed private hire drivers, fuelling calls to review market entry and the balance between taxis and PHVs across the capital.

Licensing growth centred in the City of Wolverhampton has added to cross-border competition, with PHV driver licences rising towards 50,000 and thousands more applications in the pipeline.

Concerns over oversupply are not limited to England. Drivers and trade bodies in Scotland have argued for caps to protect earnings and manage congestion, including Glasgow and Edinburgh campaigns seeking limits on PHV numbers.