February 10, 2007
Market should decide where taxi limits lie
IAIN WHYTE
THE heated debate about Edinburgh's taxi trade in the letters pages of the Evening News in recent weeks has generated a great deal of misinformation and even deliberate misinterpretation. That doesn't come as a surprise, as the suggestion of removing the cap on the number of taxis in the city is a challenge to a long-established vested interest. These debates are rarely resolved without a great deal of heat being generated by those whose interest is served by retaining the status quo.
I think here of similar debates over ending trade union closed shops, allowing solicitors to practice alongside advocates in the High Court, or removing restrictions on airline routes to allow competition from budget airlines. Can anyone honestly say that the world has become a worse place for consumers because of these? Or that they would wish to return to the cartel, monopoly or restricted practice provision that was in place before?
In all cases choice and service have improved for the public because the market is more open to new entrants and innovation. Edinburgh's taxi trade should be no different in respect to serving its market.
A number of people have suggested that by wishing to remove the cap on taxi numbers I am calling for wholesale deregulation. This is not true. Yes, I want to remove quantity regulation but I believe quality and safety regulation must remain. Our taxi vehicles must continue to be checked for safety by the cab office. Likewise, owners and drivers should still have to submit to police checks and undergo training. That is why predictions of mayhem are so inaccurate.
Those who oppose me by seeking to stir up hysteria about the possibility of unfit taxis and drivers and suggesting increases in serious crime show they have no real argument to back up their case. Otherwise why would they try to misrepresent the situation in this way? None of their doomsday scenarios would apply from a simple removal of the cap on numbers.
Allowing new entrants to the taxi trade would allow the market to decide the number of taxis and determine how many drivers should go out at any given time.
The taxi owners I have spoken to in recent weeks all complain that this would allow a free-for-all. They say that the late night and weekend work isn't worth the hassle and that taxi owners and drivers already find it hard to make ends meet.
If both these statements are true their fears about removing the cap are unfounded. No-one would want to invest in buying a vehicle simply to fail in a saturated market. However, I suspect this isn't quite true. Otherwise why would we have seen the massive increase in Edinburgh's private hire fleet in recent years? These drivers and vehicles, under far lighter regulation, are simply filling a gap in the market. If the taxi owners think they provide a better service they should welcome more colleagues to help them compete.
The other issue is the value of taxi licences or "plates" that owners have "invested" in to buy. Many say this is their pension or that it would destroy their business if they were no longer worth something. They want the council to protect the value of their investment.
I have some sympathy with the owners here because they have been sold a pup. These plates are not officially for sale as licensing law states that their transfer is strictly prohibited. However, these purchases have been condoned by a Labour council that has failed in its duty to investigate or prevent this grey trade. It is bad for the owners in the long term and bad for the public as it inflates taxi running costs by inflating the costs of joining the trade. These costs are ultimately passed on to the public.
Because of the arguments over the transfer of plates a number of owners have thrown statistics at me about their costs and accuse me of knowing nothing about the trade. I am no expert on these details and don't want to be because my argument is all about making sure there is a good service for the public. In this I am not alone in calling for a change.
The Office of Fair Trading (OFT), a body independent of politics and with consumer interest firmly at heart, conducted an investigation into the UK taxi trade as long ago as November 2003. The OFT came to a number of conclusions but by far the most important was that quantity regulation or caps on numbers should be lifted.
The OFT argued that a cap on taxi numbers like we have in Edinburgh dramatically reduces the availability of taxis, suggesting that on average this under-provision amounts to 25 per cent. It also suggested that the cap results in increased passenger waiting times of up to ten per cent at peak times and reduces choice for passengers, forcing them on to other forms of public or private transport.
But by far the most cogent argument for allowing the market to decide taxi numbers is that it would actually improve passenger safety. This is because a shortage of licensed taxis can lead people to put themselves in danger by using illegal taxis. Thankfully this isn't often a problem in Edinburgh because of the growing private hire trade but it has been known and is a real issue in other cities. 
It is quite possible that change may bring short-term difficulties as the market gradually readjusted to any increase in numbers. But any increase in numbers would be limited by the levels of demand. This is simple economics.
I like Edinburgh cabbies. They do a tough job well and are always ready with a joke or an opinion. But I was elected to serve the interests of the wider public and I have never seen consumer interest served when markets are limited to a few providers within a restrictive practice.
• Iain Whyte is leader of the Edinburgh City Council's Conservative Group
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