Regulatory reform A London story

Geoffrey Riesel

Chairman & CEO

Radio Taxis Group

London UK

• First taxi in London hackney coach 17th Century

• “Hacquenée, French term for general-purpose horse 'ambling nag'.

• 1625 - only 20 available for hire, operating out of inn yards.

• 1636, the owner of four hackney coaches brought them into Strand outside Maypole Inn,

• First taxi rank appeared - established tariff for parts of London drivers wore livery, easily recognisable. 'Hackney carriage' still the official term used to describe taxis.

Brief History

Regulating the Trade

• 1636 Charles I proclamation enabled 50 hackney carriages to ply for hire in London. - Aldermen to make sure number not exceeded

• After Civil War, 1654 Oliver Cromwell set up Fellowship Master Hackney Carriages -Act of Parliament, taxi driving became profession - 200 hackneys allowed.

• Act replaced in 1662 under Charles II by new act, required hackney coaches to be licensed -restricted number to 400.

• 1688 number increased to 600, after six years by Act of Parliament to 700

Regulating the Trade

• 1711: 800 licenses issued; then another 200

• 1833 unregulated limits on numbers; no restriction on amount of taxis - only limit -driver & vehicle to be 'fit and proper„ -condition still applies

• Makes London licensed taxi trade oldest regulated public transport system in world

• Rivalry between licensed taxis and formerly unlicensed private hire vehicles has been around as long as the taxi trade

1851

• “Knowledge of London” introduced Sir Richard Mayne

• Great Exhibition in Hyde Park - complaints cab drivers didn‟t know where going

• Passing Knowledge - detailed recall 25,000 streets, six-mile radius Charing Cross

• Location - clubs, hospitals, hotels, railway stations, parks, theatres (including stage doors), courts, restaurants, colleges, government buildings and places of worship

• Blue Plaques, statues, London curiosities -examinations are one-to-one oral tests currently approx. four years to pass.

More recent history• No legitimate limitation on numbers

• Still an unrivalled standard of KoL(best taxi drivers in world – Hotels.com survey)

• But deficient administration for many years of knowledge testing has acted as unauthorized barrier to entry

• Ageing population less night drivers

Ageing population of drivers

• More taxi drivers over 70 years old (approx. 6.5%) than under 30 years old (approx. 1.5%)

• London Taxi industry not meeting demand

• If demand not met someone else always does

• Lots of examples, New York, Paris, London

More recent history

• Ageing population especially less night drivers – (age demographics)

• Ageing drivers also keep cabs longer “sweat assets”

• Adds to pollution more older cabs

Could this happen to you?

• Does your taxi industry meet demand?

• Private Hire 2nd standard - easy entry

• Labour force chooses easier option

• Private Hire in London fills unmet taxi demand –caused by unrealistic barrier to entry

London Taxi industry - great Standard

Poor administration of the system – artificial barrier to entry

• 10 years ago Taxi trade C.24,000

• Today Taxi trade C. 24,500

• 10 years ago mini-cabs 30,000

• Today Private Hire C.62,000

• Estimates of as many 30,000 touts

Threats to taxis-other factors

• Pricing a consideration in a slow economic market

• PH perceived as cheaper

• Taxis over the years serviced most of London

• PH has all but annexed everywhere in London but centre – now in centre too

No shortage of direct competitors to taxi London industry

(who flourish when taxi services have gaps)

• Heathrow Express – (although they are now a client too)

• Gatwick Express

• Easy Bus

• National Express bus

• London Underground

• Boris‟s bikes

Threats to the taxi business - London

Inertia in taxi industry

• Effect on standards – case studiesi. New York – radios banned in taxis, apprehension of

increasing medallions – a poor move?

ii. Sweden – deregulation meant both opportunities and threats

iii. Ireland – Dublin - suicides

• Limitation on numbers causes damage, industries must grow - in line with demand

Solutionsi. Balanced continuous growth – measured

against demand

ii. Protectionism always fails

iii. High Standard of driver entry means pride in job

iv. Deregulation causes too much damage

v. Answer for London? - need to modernise and streamline the testing method but keep its standard

vi. Radio bans cause more harm than good