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WHY TAXI TARIFFS MUST RISE ACROSS THE UK: The cost of taxi services are under intense scrutiny

Image credit: Dynamo Motors

Inflation has seen the price of pretty much everything sky-rocket in the last few months, so it comes as no surprise that taxi fare tariffs are under review in most areas around the UK.

It’s widely accepted that drivers can no longer swallow the sharp fuel pump price increases or the investment in cleaner electric vehicles without passenger input also rising.

Unlike private hire vehicle prices, licensed taxi fares are fully regulated and can take some time to catch up with rising costs. Generally speaking, the tariffs used by cabbies are generated using a ‘Cost Index’ formula.

Along with changes to the cost of living and average national earnings, a number of different components relating directly to being a taxi driver (e.g. vehicle costs, parts, tyres, servicing, fuel and insurance) are also updated when the tariffs are reviewed.

So just how much do prices need to increase?

First off, the fares MUST remain competitive and fair for both drivers and passengers. If the fares are too expensive fewer people will use the services offered and opt for other un- regulated options instead. If the fares are too low, the industry will lose more drivers to other sectors. It’s an important balancing act.

Let’s start with plans in London, the UK’s biggest taxi and private hire licensing authority. Two likely options have been proposed; freezing the minimum fare at £3.20 and increasing taxi fares by 9.95%, or increasing the minimum fare by 80p, and also increasing Tariffs 1 and 2 by 4.03% and freezing Tariffs 3 and 4 which relate to night- time and long journey fares.

It might seem a big increase, and it is, however tariff increases have become less structured in their timescales. The last tariff changes were implemented over two years ago in January 2020. Whereas rail companies and other transport companies review tariffs on an annual basis, the taxi trade sometimes lags in its pricing.

The biggest rises being discussed can be found in Rugby, Argyll and Bute, and Barrow. Taxi fares in Rugby are due to become the most expensive in the Midlands after a price hike of more than 20% for a two-mile journey was approved by councillors last month.

In the west Scottish authority of Argyll and Bute an increase of 15% has been proposed. The last increase in this region took place in 2014. In Barrow it’s a similar story with an increase of around 14% being put forward. That being the first rise in a decade.

In other regions:

  • Harrogate have asked for a 5% increase

  • Guernsey fares have increased 3.34%

  • Basildon taxi drivers are asking for increases to minimum fares and changes to help night-time economy to entice drivers back

  • South Lakeland prices could rise 5.4%.

In South Ribble drivers are pleading with their licensing authority to review fares after seven years of no change. It’s a similar story for drivers in Angus who ‘don’t want to wait until May/June to start the process’ such is the need to meet costs now.

There are other reasons for increasing fares that are local to individual areas too. In Sheffield, drivers are asking for their council to increase fares to cover the new daily ‘Clean Air Zone’ charges cabbies must pay.

Taking all these arguments into account, increasing prices can only help entice more drivers back to the industry after a bleak pandemic.

What are the ‘competition’ doing?

Arguably taxi prices have stagnated in recent years in a bid to stay competitive with gig-economy ‘disrupters’.

The big private hire app operators have however moved to increase their prices by around 10% in recent months and all now sit at similar base line prices.

Uber brought in a fare increase in London with the aim to recruit more drivers to cover demand. The company had been experiencing high cancellation rates and waiting times during peak times, which is also believed to have been an issue for other apps and operators.

Bolt have raised their prices by around 10% to follow rivals Uber. FREE NOW and Ola have so far resisted price changes, but that could change quickly as ride- hail companies try to entice drivers to cover their work in a market where demand is higher than the supply of drivers.

Is now the time for an increase in taxi prices?

If local authorities, the travelling public and those working in the taxi sector want a modern fleet with fairly paid drivers then the answer is quite simply yes.

Inflation alone should dictate the increase, but throw in the need to invest in greener vehicles and the need to cover lost revenue caused by the pandemic, the fare prices can realistically only go one way.


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