English experience of deregulation of the taxi industry

The U.K. government has proposed that there be no limits on the number of entrants to the taxi trade. There is some evidence as to the likely effects of such a move since, from January 1986, the absolute discretion previously granted to local authorities to limit the number of hackney carriages in their area has been abolished. The results of three nationwide studies of taxi licensing policy since that date suggest that this entry deregulation has had only limited success in achieving its objectives. Vehicle numbers have not increased at a noticeably greater rate in districts which have deregulated. There is no evidence to suggest that increased competition in deregulated districts has led to lower fares. In restricted markets, a substantial and increasing licence premium is enjoyed by licence holders. In deregulated districts, we see generally lower standards of quality enforcement and severe shortages of rank capacity. The focus of the current legislation on the single criterion of passenger waiting time as the determinant of regulatory policy is misguided. However, the evidence of entry deregulation already to hand suggests that the further liberalization, without concomitant requirements to ensure fares and quality requirements are set appropriately, is unlikely to yield significant benefits to consumers.