Taxi licensing schemes are not intended to be self-financing or cross-subsidising

The Court of Appeal’s recent decision in the case of Rehman (On Behalf of the Wakefield District Hackney Carriage And Private Hire Association), R (On the Application Of) v The Local Government Association is likely to be unwelcome news for any cash-strapped councils seeking to fund the costs of taxi enforcement through licence fees.

The issue arose on a judicial review brought by Wakefield District Hackney Carriage and Private Hire Association against the decision the Wakefield Council’s licensing committee made to include the costs of taking enforcement action against licensed drivers in its fee for licensing vehicles (under the Local Government (Miscellaneous Provisions) Act 1976). The council argued in the High Court that as a general principle of law, local authority licensing schemes are intended to be self-funding rather than dependent upon general funds. 

At first instance HHJ Silver rejected this argument; declined to determine definitively whether or not the costs of enforcement action taken against drivers could be taken into account in the fixing of driver licence fees, and refused to accept that enforcement costs against licensed divers could be cross-subsidised by bringing such costs within the scope of the ‘control and supervision of hackney carriages and private hire vehicles’ in accordance with section 70(1)(c) of the Act.

The council appealed arguing that:

1. The Judge incorrectly concluded that there is no general principle of law that licensing regimes are meant to be self-funding;
2. The cost or taking enforcement action against licensed drivers cannot be recovered as part of the fee for licensing drivers and as such;
3. The cost of taking enforcement action against licensed drives is therefore recoverable as part of the fee for licensing vehicles.

The Court of Appeal considered that the Act clearly provides for three types of licence (1) vehicle licences for hackney carriages and private hire vehicles; (2) drivers’ licences and (3) operators’ licences, and remarked that “The notion that the fee for one type of licence can reflect the costs involved in another, far from being implicit in Part 11 of the 1976 Act, is entirely contrary to its structure.” 

As for (I) the Court of Appeal held that there is no such general principle and in response to the intervention of the Local Government Association on the issue, went on to say that limited resources and the potential adverse impact on enforcement cannot affect proper statutory interpretation; as for (II) that the cost of driver enforcement action is recoverable under section 53, but regardless of the correct interpretation of the section, such costs cannot be taken into account in fixing vehicle licence fees; and as for (III) it cannot have been the intention of parliament to authorise something “entirely alien” to the structure of Part 11 of the Act, which on its face has a “comprehensive, self-contained regime for each category of licence”.

Interestingly the Court of Appeal further considered that, contrary to the argument of the council and without having heard the point argued, the costs of taking enforcement action against (licensed) drivers can be included in the drivers’ licence fee in accordance with section 53(2) which provides for the recovery of fees for the grant of drivers’ licences as are considered ‘reasonable with a view to recovering the costs of issue and administration’. However, this is not considered to extend to unlicensed drivers against whom the recovery of enforcement costs is likely to remain controversial until such time as the point is argued and authoritatively determined. 

This judgement is likely to add to the frustration and argument of those long since seeking the wholesale reform of the entire taxi licensing regime, in the meantime, local authorities may wish to:

• Review Section 53 of the LG(MP) Act 1976 as regards driver licence fees;
• Review Section 70 of the LG(MP) Act 1976 as regards vehicle and operator licence fees;
• Review their fees for each category of licence and ensure they accurately reflect the costs associated with the issue and administration of such licences;
• Ensure licence fees do not exceed any limits specified in the legislation and do not include the recovery of costs other than those permitted by the legislation;
• Ensure that licence fees do not cross-subsidise one another;
• Ensure enforcement costs are not recovered by way of licence fees.

For more information

Please contact Matt Marsh.