Limiting Numbers of Hackney Carriage (Taxi) Licences
(Explanatory Notes)

The following information seeks to explain the reasoning behind why the numbers of hackney carriage licences issued in Elmbridge are currently not restricted. (It is intended as guidance only).

Under old hackney carriage licensing provisions Councils had an unrestricted discretion to limit the numbers of taxi licences issued. However, this changed with the introduction of the Transport Act 1985 which removed that discretion with effect from January 1986. The legal position then became that before a Council can refuse an application on the grounds of limiting numbers, they have to be satisfied that there is no significant unmet demand for taxis. If they are not satisfied on this point they must grant the licence. In order to prove that there is no significant unmet demand, a Council would be required to carry out detailed research, probably by way of a borough wide, public survey. A number of companies exist who will carry out such surveys but a typical cost is £15,000 upwards. This cost would be recovered through licence fees. Such a survey might or might not prove whether or not there is unmet demand. In order to continue to refuse licences on the basis of no unmet demand the survey would have to be repeated periodically, possibly as frequently as every 18 to 24 months.

In fact, Elmbridge did carry out such a survey when this legislation was originally introduced although a different division of the Council was then responsible for taxi licensing. It is believed that the survey did not show that there was no significant unmet demand and hence there was no basis for continuing to limit licence numbers.

The conclusion to this is that there was no legal basis for continuing to restrict licence numbers in Elmbridge (although there are some authorities who do still limit numbers by carrying out such surveys, undoubtedly paid for by taxi drivers).

The Government did publish in 2001 its Regulatory Reform Action Plan in which it announced that it intended to remove the ability for licences to be limited completely but it is unclear as to whether this went further than that. The Office of Fair Trading also recommended the removal of this ability when it investigated UK Taxi Services.

In 1985 the Department of Transport issued a circular containing guidance on this issue and it appears that guidance remains in force. That guidance accepts that the abandonment of control of numbers of licences will mean that the only control on taxi numbers is the law of supply and demand.

Since then there has been a number of significant court cases which have made the situation more difficult rather than easier for a Council wishing to justify continuing to control the numbers of licences. Certainly our neighbouring Boroughs of Spelthorne, Surrey Heath, and Runnymede currently do not.

In summary, in Elmbridge, providing an applicant or vehicle meets all the relevant criteria in relation to public safety, a licence will be granted. Limiting licences would be an expensive exercise to for the trade to fund and would also be contrary to a number of Governments policies.