Office of Fair Trading officials faced some tough questioning when a House of Commons committee heard evidence on the recommendations in its taxi and PHV report.

Office of Fair Trading officials apologised repeatedly to MPs regarding their inability to adequately answer questions posed in relation to the competition watchdog's taxi and private hire vehicle (PHV) report published in November 2003.

In a two and a half hour oral evidence session members of the House of Commons Transport Committee also quizzed witnesses from taxi trade representative bodies, licensing authorities and the National Association of Taxi and Private Hire Licensing and Enforcement Officers (NATPHLEO).  The OFT's recommendation that UK licensing authorities should cease to restrict the number of taxis operating came under particular scrutiny, and its recommendation for more competition on fares was also discussed

Graham Stringer MP said that the evidence showed that waiting times and fares were lower in restricted areas and accused the OFT of using figures which suited its prejudices, citing a lack of 'hard statistical evidence'.

Jonathon May, Director of the OFT division which conducted the study, replied that de-restriction studies demonstrated substantial benefit to consumers.  The OFT also rebutted Mr Stringer's claims on the basis that they they reflected the fact that urban areas tended to be restricted, whereas rural areas tended not to be.

Chairman Gwyneth Dunwoody suggested that the OFT didn't have the evidence to justify its conclusions.

Louise Ellman MP pointed out that Liverpool had de-restricted taxi numbers but later reversed this policy, and asked whether this demonstrated that local authorities knew better in these matters.  She also said that there was little evidence to suggest much in the way of consumer benefit.  Mr May claimed that there was compelling evidence, but Mrs Ellman stated that it was uncompelling.

Mrs Dunwoody said that the OFT seemed to find evidence acceptable when it agreed with its prejudices, but unacceptable when it didn't.  She joked that this selective use of evidence was not unknown in the building, but that this was not expected from the OFT.

Clive Efford MP, an ex-London taxi driver, pointed out that the lack of available rank space could lead to greater congestion under de-restriction, and this would put pressure on tarrifs as drivers might have to drive around empty looking for rank space, burning more fuel in the process.  The OFT replied that this could be alleviated by more rank space, temporary ranks and a greater tendency for taxis to ply for hire rather than sit on ranks.

Mr Efford put it to the OFT officials that they couldn't have it both ways - they wanted deregulation of numbers, but at the same time wanted fare and quality regulation to continue.

Mr May countered by pointing out that there were good and bad regulations in any market, and that there were compelling reasons to regulate taxi fares and quality, but not to justify quantity restrictions.

Mr Efford claimed that the OFT was looking at the market from the outside, and that its suggestion that taxi fares should be negotiated just wouldn't work, particularly in big cities late at night.  Mr May said the recommendation was intended to underline that many people didn't realise that taxi fares were maximums and that they could be negotiated downwards.

Mr Efford asked what research the OFT had done regarding people booking by telephone, and how drivers shifting from PHVs to taxis would impact on this.  The OFT officials admitted that they had done no such work.

Earlier in the session, committee members heard evidence from taxi trade representatives, including Peter Kavanagh of the Transport and General Workers' Union and Dennis Conyon of the National Taxi Association (NTA).

In opening remarks Mr Kavanagh pointed out that in controlled areas fares were lower, waiting times were lower and there were more cabs overall in the combined taxi/PH trades.  He said that the OFT had not assessed the impact of de-restriction on telephone waiting times.

Mrs Dunwoody asked Timothy Gray of the NTA about license premiums.  Mr Gray said that there was no hard evidence on prices, but in any case there was no evidence that consumers suffered as a result of license premiums.  He said that they provided a barrier to entering the trade that deterred people like 'fly-by-night' PH drivers. 

Mrs Dunwoody also asked how de-restriction would impact on drivers' earnings.  Mr Kavanagh replied that in Edinburgh two 25% fare increases were implemented to compensate drivers for decreased earnings caused by de-restriction.  He also claimed that it put pressure on drivers and vehicle quality, and thus led to the council re-restricting.

Brian Donohoe MP asked about the impact of minicabs/PH on the taxi trade.  Mr Kavanagh said that with de-restriction PH drivers often moved into the taxi trade en masse, and when the found that they could not earn a living they left the trade altogether, meaning less cabs overall in de-restricted areas.

Mrs Ellman asked if the unmet demand surveys were adequate, and Mr Kavanagh claimed that although the methodology could be improved, 'managed growth' was better than a free-for-all.

Mr Conyon added that any unmet demand was highlighted by surveys and that local authorities were best placed to deal with this.  In response to another question from Mrs Ellman about vehicle quality Mr Conyon said that this would drop because earning power would decrease with deregulated numbers.

Mr Stringer then asked what the cost of the plate was that could be resold for up to £50,000, often immediately after issue, which seemed to indicate a monopoly situation.  Mr Conyon said that he had no facts as to cost and found what Mr Stringer had said was difficult to defend, but claimed that many waiting list applicants did not take up the offer of a plate because of the cost of the vehicle.

Later Mr Efford asked about people who were granted plates in restricted areas and immediately cashed in by selling them on.  Mr Conyon said that this problem involved negligible numbers, and the award of a plate was normally seen as an entry into the business.

Mr Kavanagh said that the T&G was opposed to fare competition because taxi drivers were among the most assaulted groups of workers and that haggling on prices would lead to conflict.  He also claimed that double-shifting of taxis in restricted areas ensured a service during unsocial hours - in de-restricted areas the number of taxis increased during the day but not at the busiest times late at night.

Mr Efford said that the report was deficient as regards consumer satisfaction, and said that a wide range of factors, other than those identified by the OFT, had to be considered.  Mr Conyon agreed, saying that the report was 'very shallow' and 'lacking in substance'.  He added that the consumer was 'at the heart' of his organisation's opposition to the report.

The committee then heard evidence from local authority representatives from Manchester, Liverpool and Cambridge.

The Manchester representatives said that the city had a policy of 'controlled expansion' in place   There was little penetration by black cabs outside the city centre, where there was demand for lower cost PHVs in the many deprived wards.  In response to a question from Mrs Dunwoody, they said that they had had no consistent pattern of complaints about taxi availability.

The Liverpool representative said that Liverpool was broadly similar, but had a larger taxi than PH sector, which was unusual.  Mrs Ellman asked why the city's de-restriction policy was reversed.  In reply the official said that traffic problems had arisen due to lack of rank space.

Mrs Ellman also asked how de-restriction would affect fare levels.  It was pointed out that de-restriction needn't impact on fares because levels were set by local authorities.  The Liverpool representative also claimed that the OFT's proposal to encourage fare competition was ludicrous.

Mr Efford asked if all authorities used the same methodology to carry out the 'unmet demand' surveys.  It was pointed out that a transport industry standard was used.

The NATPHLEO was represented by past chairman Mr Peter Perkins.  He said that he had to sit on the fence in relation to de-restriction since half of his association's members restricted, but half did not.  But Mr Perkins said that deciding policy on numbers nationally would be a 'disaster'.

Asked by Mr Stringer on the balance between his members regarding regulated numbers or otherwise, Mr Perkins said that the tendency was that in rural areas local authorities deregulated because of the distances covered, whereas in more urban areas different vehicles were required for negotiating the tighter streets.

Mr Perkins said that it might be difficult to recruit marshals to police taxi ranks late at night, and agreed with Mr Stringer that the OFT's suggestion in this regard was impractical.  He also later agreed with Mr Efford that the cost of marshals would ultimately be borne by the consumer.

Mr Efford also asked if de-restriction meant that cabs would not be double-shifted and therefore a poorer service would result during unsocial hours.  Mr Perkins agreed that a 24-hour service was more likely with numerical restrictions and consequent double-shifting.  Thus a better quality of service would result.

Mrs Dunwoody asked if there was a cost associated with providing new taxi ranks.  Mr Perkins said that there was, including advertising and consultation costs as well as actually establishing the rank.  He also said that there was no evident difference between vehicle quality in restricted and un-restricted areas.

Mr Efford cited evidence from licensing officers in South Ribble, Falkirk, Leicester and Liverpool that vehicle quality deteriorated following de-restriction, as against the OFT's assertion that quality could be separately regulated.

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