Licensing authorities have a statutory power to set the maximum fares that licensed hackney carriages (taxis) can charge for a journey.
Under section 65 of the Local Government (Miscellaneous Provisions) Act 1976, licensing authorities have the power to “…fix the rates or fares within the district as well for time as distance, and all other charges in connection with the hire of a vehicle or with the arrangements for the hire of a vehicle, to be paid in respect of the hire of hackney carriages by means of a table (hereafter in this section referred to as a “table of fares”) made or varied in accordance with the provisions of this section.”
It is worth noting that the power is a discretionary one which means that licensing authorities are not obligated to set maximum fares but can do so if they so wish. All local authorities however, who have adopted the 1976 Act, choose to exercise the section 65 power.
In order to set maximum fares, the 1976 Act prescribes a statutory consultation process and a means of dealing with objections in relation to a licensing authority’s proposal to adopt or vary fares.
When a district council make or vary a table of fares they shall publish in at least one local newspaper circulating in the district a notice setting out the table of fares or the variation thereof and specifying the period, which shall not be less than fourteen days from the date of the first publication of the notice, within which and the manner in which objections to the table of fares or variation can be made.
A copy of the notice referred to in paragraph (a) of this subsection shall for the period of fourteen days from the date of the first publication thereof be deposited at the offices of the council which published the notice, and shall at all reasonable hours be open to public inspection without payment.
If no objection to a table of fares or variation is duly made within the period specified in the notice referred to in subsection (2) of this section, or if all objections so made are withdrawn, the table of fares or variation shall come into operation on the date of the expiration of the period specified in the notice or the date of withdrawal of the objection or, if more than one, of the last objection, whichever date is the later.
If objection is duly made as aforesaid and is not withdrawn, the district council shall set a further date, not later than two months after the first specified date, on which the table of fares shall come into force with or without modifications as decided by them after consideration of the objections.
A table of fares made or varied under this section shall have effect for the purposes of the Act of 1847 as if it were included in hackney carriage byelaws made thereunder.
It is worth noting from the outset of this article that the fares set by licensing authorities are the maximum fare that can be charged by a driver of a hackney carriage. This means that such a driver is well within their rights to negotiate the fare down provided that the final agreed fare is no more than the maximum set. Furthermore, maximum fares only apply to journeys that commence and end in the same local authority area. Therefore, if a journey starts in the licensing authority’s area but ends in outside that area, a fare greater than the one displayed in the taxi meter can be charged provided that the negotiation and agreement on the higher fare was concluded prior to the commencement of the journey (s.66 of the Local Government (Miscellaneous Provisions) Act 1976).
The issue of setting fares for hackney carriage drivers is an important one primarily for two reasons. The fares set by licensing authorities largely determine the ability of drivers to earn a decent living but also functions to ensure that passengers receive a fair deal when taking a journey in a licensed hackney carriage. Given the importance of setting hackney carriage fares, it is important that local authorities have a proper way of calculating fares in their local areas.
The importance of setting fares in a fair and proper way was the subject of a recent High Court case involving Guildford Borough Council. The borough council used its discretion under the 1976 Act to set the maximum fares for hackney carriage licence holders in the borough. The borough council used publicly available data and information to determine the maximum fare. The outcome of the fare setting exercise by the council resulted in a reduction in the maximum fare.
This decision was challenged by Mr Mark Rostron who is the Secretary of the Guildford Hackney Association. The primary grounds for challenge were that the council relied on the wrong data to determine the fare and that, the exercise of fare setting breached European principles of free movement under the EU Treaty, because they were liable to deter European operators from establishing in Guildford and they could not be justified.
The Background
In 2013 the borough council’s Cabinet approved a method for calculating a table of fares.
This calculation method involved a formula that produces the basic charge per mile travelled with one passenger by an average driver that is required to provide a certain annual salary having covered average running costs. The running costs include allowances for matters such as fuel, tyres, parts and servicing, depreciation, and insurance. A number of the costs involved were derived from figures about the costs of owning and running a car published by the AA. The annual salary is intended to represent the average of the median annual gross salary of residents and workers in Guildford.
Before undertaking the statutory consultation required if a new table of fares was to be adopted for 2016-2017, the borough council sent a consultation questionnaire to all of its 200 licensed hackney carriage drivers and the proprietors of 193 licensed taxis on April 27th 2016 seeking their views on each of the costs to be used in the calculation of fares, further information about the conduct of their businesses and any other comments that they might have. This consultation closed on May 27th 2016. The borough council received, however, only five substantive replies to the 262 consultation questionnaires that they had distributed.
A report that followed the non-statutory consultation considered the responses, the appropriateness of using certain costs figures provided by the AA rather than those used by Transport for London when setting taxi fares in London, the reduction that had occurred in the cost of fuel since the table of fares had been last calculated in 2013 and various changes to the items of cost that should be taken into account.
The new fares table adopted resulted in a reduction in the basic tariff for the first mile from £4.86 to £4.52 (a reduction of 7%) and for the second mile from £2.04 to £1.72 (a reduction of 15.7%).
Clearly a decision to reduce the fees was always going to be a hard one to accept by the hackney carriage trade. Counsel acting form Mr Rostron argued “…the table of fares impugned put the livelihood of 220 drivers operating in Guildford at risk or would at least have a significant impact on it, intense scrutiny of the costs allowed by the Council and a robust justification of them was required.”
However, John Howell QC sitting as High Court judge ruled in favour of the council saying:
“In my judgment it may also reasonably be concluded from the evidence submitted by the Borough Council in respect of the particular matters in issue that the maximum fares selected were reasonable and that the table of fares adopted preserves a fair balance between the public interest and the interests of drivers. Having regard to the intention to review the table of fares annually, if not sooner if new information emerges, in my judgment the adoption of the table of fares impugned cannot be said in all the circumstances to have exceeded the extent of the discretion that the Borough Council had. It was not disproportionate.”
Whilst the case was largely determined on its facts, there are a number of important issues raised that will have more general relevance to the licensed trade.
- The importance of proper consultation – The borough council undertook a non-statutory consultation on the construction of its fare calculating methodology before undertaking their formal statutory consultation required under section 65 of the Local Government (Miscellaneous Provisions) Act 1976.
Whilst the judge ruled in favour of the borough council on this occasion, it has been commented that the saving grace for the Council was that it had gone to great lengths to investigate, consult and determine the correct input data for its calculations.
To this extent the outcome of this case does not necessarily provide a comfort blanket to local authorities. This case illustrates that local authorities can still be held to even if they complied with the letter of the law.
- The importance of responding to consultations – Throughout the judgement, reference was made to the significance of licence holders not responding or not offering an alternative.
For example, the judge said: “In my judgment this item illustrates the difficulties that the Borough Council had to confront given the general lack of specific information from drivers, including the Claimant and members of his Association” and “But, in the absence of sufficient information on such costs, the Borough Council had to consider what approach they should adopt.”
As this case illustrated, proper and considered responses to consultations are essential not only to influence the outcome but also without it the trade will have diminished grounds for bringing any subsequent appeals.
- The importance of a fair fare – This case illustrates the importance of hackney carriage drivers getting a fair fare so that they can make a decent living working as a hackney carriage driver. Lots of local authorities have no scientific (or formal) way of calculating fares which in turn gives hackney carriage drivers no guarantees of being able to make a decent living. There are many approaches taken by local authorities to set fares and it is incumbent on hackney carriage drivers to ensure that their local authority set their local fares fairly.
I have already said that fares primarily serve a double function, one to give the customer a fair deal and two to ensure that hackney carriage drivers are able to make a living from working in the trade. If the balance is out, those set to be most adversely affected are hackney carriage drivers.
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Taken from the February 2018 PHTM edition. This article was written by Stephen Mccaffrey, Head of Kings View Chambers & Taxi Defence Barristers.
