UK Competition Watchdog: Minicab Cap Would Result In Fare Hikes


    The UK competition watchdog has scrutinized the proposals to grant the councils the power to impose a cap the number of minicabs in the capital after a plea by Sadiq Khan, the London mayor, last month.

    The Competition and Markets Authority (CMA) was answering to a government-commissioned review into PHV and taxi licensing after some stakeholders suggested that the current legislation was no longer suited for its purpose.

    Among the recommendations that were made in the report that was carried out for the Department for Transport (DfT) is that the councils should be granted the power to impose a cap on the number of vehicles. It also suggested that there is an end to cross-border hiring whereby a driver obtains a license in a certain area and trade in another area, where regulations may be laxer.

    Last month, the Khan demanded new powers to bring in a controversial cap on the number of PHVs that are operating in the capital, after a similar clampdown that was imposed in New York. Khan said that a cap was essential to curtail the “unsustainable, huge increase” in the numbers of PHVs.

    Michael Grenfell, the head of enforcement of the CMA, stated: “I am concerned that a numerical cap on the number of providers of taxi/PHV services risks having the effect of artificially and unnecessarily constraining competition, to the detriment of passengers – depriving them of the best prospect of high service standards, value for money and innovation in service provision.”

    He said that any proposal to impose a cap on the cab numbers in the capital should be subject to “a clear, well-evidenced and considered public interest test” prior to being applied. However, he said that he was “not convinced that the case for any kind of cap or numbers has been adequately made out.”

    He added: “Even if there were to be such a cap, the factors taken into account in a public interest test should at least include the effects on competition, including on service standards and affordability of fares, bearing in mind that the absence of affordable fares can induce people to travel by less safe modes of transport.”

    In the summer, Transport for London (TfL), which has Kha as its chairman, and Uber were engaged in a public battle because of the renewal of its licence in London after it was revoked by the TfL  because it said that the taxi-hailing app was not “fit and proper person” to hold a licence.

    Following a series of changes made by Uber, it was granted a temporary 15-month licence to continue its operations in London.

    In a nod to the license battle, Heidi Alexander the deputy mayor for transport, welcomed the recommendation of the report for a cap. She said that the current laws “weren’t strong enough.”

    She added: “I’m delighted that a group of experts made up of trade union representatives, regulators, politicians and safety campaigners are recommending we get the powers to go further – including putting an end to cross-border hiring, recognising injustices around low pay and exploitation, and giving us the power to cap the number of private hire vehicles.”

    She continued: “The government needs to set out urgently how they are going to respond to these proposals as they could make a real difference – improving safety for passengers, pushing up standards, and making our city a better place for everyone.”

    The chairman of the Licensed Private Hire Car Association, Steve Wright, said that the proposed cap was “anti-competitive, protectionist, un-environmentally friendly and safety compromising.”

    He added: “This proposal, if adopted, could bring about shortage of supply and make it very difficult for hire and replacement vehicle companies to operate. This in turn could leave consumers at risk of being stranded because of volatile and unpredictable demand factors, such as the weather and seasonal demands. This proposal also lacks any tangible safety benefits and in our view, it would compromise rather than enhance safety.”