Opinion:  Another uncompromising response re the OFT's report - this time a driver offers a critique of the T&G's submission to the Government's OFT consultation.

In its November Edition of Cab Trade News (CTN), The Transport and General Workers’ Union (T&G), described the Office of Fair Trading’s (OFT) report into taxis and PHV services, as "superficial and naive". Having just read the T&G’s initial response to the OFT report, those comments in CTN would be better suited a lot nearer to home.

The T&G’s response is packed full of outdated dogma and flawed logic, it shows the T&G to be the Liberal Party of the cab trade, all things to all people, but with no real chance of ever actually doing anything that matters. 

From the very start it glorifies itself unjustly, apparently: 

The T&G is the largest representational body within the taxi industry, both in terms of number and geographical spread.

Whereas anyone in the cab trade knows that the largest taxi union/association in the UK is the Licensed Taxi Drivers Association (LTDA), with a membership probably three times that of the T&G. Not a good start, I’m afraid.

Due to the amount of space and time available to me, I wont respond to every word in the T&G’s response, just the blindingly obviously inadequate comments.

Before responding in detail we would like to state that we believe that the OFT has missed the opportunity to produce a radical report which could positively influence the future of the industry. Indeed our officer with responsibilities for our taxi membership has described the OFT findings which have been placed before the DfT, as containing little more than the tired old mantra of those who understand little about taxi drivers, their passengers, or public transport in general.

The T&G don’t want change, they bang on about the ‘managed growth’ theory, but this is what we have had since 1985. Just because you mention something time and time again, doesn’t make it any more sensible. Managed growth has failed, if it was a success, then the OFT report wouldn’t have happened. But what radical ideas do the T&G want, for years we hear and read about the mythical ‘National Cab Act’, but that’s it. The substance has never followed.

Indeed our officer with responsibilities for our taxi membership has described the OFT findings which have been placed before the DfT, as containing little more than the tired old mantra of those who understand little about taxi drivers, their passengers, or public transport in general.

Spoken like a true bus driver who has presumably little real knowledge of the cab trade.

The OFT uses the phrase “artificially limited” to describe the status of areas that elect to measure demand and match supply accordingly. We believe this exposes their starting point and demonstrates an unwillingness to give serious consideration to a policy of “planned and managed growth” which the T&G has been commending for a number of years.

I don’t think we need to stop the world in shock, when economists and competition lawyers start with the view that restricting any service is perhaps not a good thing. Anyone who thinks different is him or herself being naïve.

However, in areas with restricted numbers such as Liverpool and Manchester the LAs are able to take advantage of a 'double shift system' to ensure better coverage during the night-time hours.

So we finally have the answer to all our woes, the T&G are going to tell drivers that if they don’t work nights, then the taxi game is not for them. A union that wants to put added burdens on those wishing to be employed has somewhat missed the point of its being. Perhaps we will then have a waiting list for drivers, and they can have a flawed ‘managed growth’ policy to assess drivers demand. But what if an owner doesn’t want a jockey, hmmmmmmmmm.

We believe research should have been carried out into how the lack of quantity controls, affects the consumer, but we think this should cover areas outside of London, as London is not a representative market.

But the OFT did. They carried out a study into how quantity controls affected the taxi market. They found it had many detrimental effects. Asking them to do another study looking into the reverse, will not affect those detrimental facts and figures.

Manchester City Council has developed its own highly successful policy of controlled expansion, which addresses the question of unmet demand and latent demand, a factor that is highlighted in the OFT report (paragraph 4.52 page 36). Halcrow Fox has carried out surveys in Manchester every two years. These surveys provide a wealth of information and enlightenment to present day problems, but, for their own reasons the OFT did not look at Manchester in detail in the report. It would be churlish to suggest that this was because it did not suit the OFT’s argument to do so.

So do we now have part of T&G’s Cab Act? Is this now T&G policy that every council in the land surveys every two years? No doubt the share price of Halcrow will soar, 400 odd councils X £15-20,000 every other year. Not bad at all. Especially when it’s been found by the OFT study to be a highly flawed process. I mean who cares about the thousands and thousands of flaggers that the present system misses?

In 4.26 the OFT have to acknowledge that a straight comparison found that waiting times in restricted areas were 30% lower than in unrestricted areas. Further analysis by them indicated that this was “largely explained by the fact that quantity controlled areas tended to be urban, rather than by the existence of quantity controls per se”. With little explanation provided a “statistical adjustment” is then made which produces a figure more “supportive” to the OFT thinking. But even this can only produce the claim that de-restricted areas have waiting times between 2% and 7% lower, than restricted areas. Possibly acknowledging that this hardly makes for the most convincing of arguments the OFT then opts to multiply this marginal time saving by the number of trips undertaken in the year to achieve something more “tangible”.

T&G Comment

This is tabloid headline material. Our analysis of the report would indicate that the actual waiting time reduction following de-restriction and an increase of 50% in taxi numbers is merely 15 seconds in the area (Sheffield) that the OFT chooses as a model.

So hear we have the T&G criticizing the OFT for averaging out to reach a conclusion, in one breath, and in the next, guess what? They are averaging out to reach a conclusion. But whereas the OFT’s conclusion proves their point, that de-limitation works, the T&G’s point doesn’t proves their's that de-limitation fails, it proves the reverse. If the waiting times in Sheffield haven’t changed that much, despite a large increase in numbers, then de-limitation has worked, and the doom-mongers saying that de-limitation is the end of the world, are wrong. Life still goes on, and in Sheffield the trade is flourishing.

The OFT can only draw comfort from the following response, which deals with aspiration rather than experience: a slightly greater proportion of respondents in restricted areas (50.4%) feel there is potential for improvement in hackney carriage services than in de-restricted areas (47.9%).

That is not the issue. Customers want us to improve on the service we give. In restricted areas they want more cabs out, and in de-limited areas they also want more cabs out. The latter however may need to be looked at, but the former is quite a straightforward situation to address. You just de-limit, and hey presto.

What the OFT appear to be saying here is that survey data does not reflect the actual situation. If this is the case, what reliance can be given to the survey results?

Great bit of twisting there. The OFT were saying that the current survey system takes no notice of latent (that which is not obvious) demand, thus they quoted from patent (rank observation) demand. If it’s now the T&G view that all existing un-met demand surveys are flawed, then bang goes their members defense against any refusal for a new HC vehicle license i.e. immediate de-limitation in Manchester, Glasgow, Edinburgh, Brighton & Hove, and many many more.

The OFT also fails to take into account double-shifting, that is very prevalent in restricted areas, and which assists with around the clock coverage. This around the clock coverage often deteriorates with de-restriction. The experience in Birmingham for example indicates that there is an oversupply of taxis during daytime hours, now that the market is derestricted, with no marked improvement in supply at night-time.

Back we are now yet again, to the new kid on the block - ‘double shifting’. This can be repeated as many times as they like, because no one with any sense believes it will ever happen. Which perhaps is why only those who drive buses mention it. As for Birmingham, shock horror, they have more cabs working during the day, than at night. But how bad was the situation before de-limitation? How many customers did the previous failed system lose? No improvement in supply is far better than the detrimental effects of restricting HC numbers, as the OFT report clearly shows.

In Liverpool, stories of "taxi wars" following de-restriction are legend, with local police having to resort to extreme courses of action to clear congested areas. Result Re-limitation.

Another often reported piece of nonsense. I wonder (even though we all know the answer) how many of those extra plates issued by Liverpool Council, which supposedly caused all those problems with congestion etc, have been handed back to the council. None, but all of a sudden those scare stories are no more. Perhaps all Liverpool’s roads have been widened, or maybe the vehicles have been shortened, or more likely the whole story was a loads of old tosh.

Delimitation of taxis in Edinburgh, in 1987, increased numbers from 630 to 1030. By 1990 as many plates were being returned as issued. The Council recognised the serious financial hardship being suffered by taxi drivers. A 12-hour day shift resulted in 20 jobs compared to 35 in the mid 80's. To help ease hardship the Council introduced tariff increases of over 25% twice in a three-year period. By 1994 vehicle standards started to fall as cab owners cut back on maintenance. By 1998, there was a shortage of drivers for the total plates issued.

A few more often-repeated fables. If drivers and vehicle standards fall, it’s evidence of poor council licensing, nothing else. If plates were being handed back, then that’s exactly what happens in the majority of councils in the country. People come into the trade, and people leave it. It’s normal. Another often-repeated fable, is the ‘too many car, not enough drivers' situation. Well how inviting is the taxi trade, when some are saying “please come in and drive my car, but not your own”, and “you can drive my car anytime you wish, as long as it’s at night”?

As a result Edinburgh now works with the Trade and has adopted a "managed growth" policy backed up by surveys.

Are these the ‘flawed’ un-met demand surveys that the T&G have just called into doubt?

Swift and sudden entry of large number of new license holders - often from the private hire trade.

Therefore there is no change to the total licesned fleet. Freedom of choice for all licensed drivers, not just the select few.

Large numbers attempting to get on to ranks.

Well get more rank space. Is there a council area in the UK that has enough rank space? It’s a poor excuse, repeated by those with a weak case trying desperately to defend the restrictions on taxi numbers.

Neglect of core (private hire) customer previously served by P.H. drivers.

Absolute rubbish, there is no evidence given by the T&G to back up this claim. Perhaps this is because there isn’t any.

Cherrypicking - where previously cabs have "doubled up" or "double shifted" covering all periods of demand, the newly licensed plate-holders work "core" day time hours. Less rather than more during unsocial hours.

So new driver/owners are going to buy a wheel chair accessible vehicle, insure it, and finance both by sitting around all day long. If the T&G think that both HC and PH drivers are that thick that they can’t add up, then please let them say so.

In the longer term, "independent" drivers move onto company circuits or go out of business.

Hang on a bit here. Didn’t the T&G just say that the phone trade would be neglected? Now it appears it will be the street work neglected because cars will have to do phone work. Well at least the policy lasted a couple of sentences.

Over-supply leads to reduced earnings. This leads to:

i) Excessive working hours

ii) Pressure to increase fares

A touch of scare-mongering there I believe. If you can’t earn a reasonable wage in reasonable hours, then you are in the wrong trade. So please leave it to those of us who can and do.

All taxis sitting for longer periods on ranks or driving around empty for longer creating town centre congestion and increased pollution.

Please read the OFT report. In it you will find that such claims are rubbish.

We also know that Leicester, Bristol and Newcastle have reversed de-limitation decisions following similarly unsuccessful experiments.

Again, how many plates from these ‘unsuccessful experiments’ areas have been handed back? I wonder if the T&G objected to the de-limitation in Bristol, which was brought about following pressure from the Commission for Racial Equality?

The T&G believe that the argument that ‘unofficial premium value attached to taxi vehicle licences when taxi vehicles are sold’ is irrelevant. This is because it is the welfare issues of price and quality of service which are the most relevant. The grey market argument would only be relevant if economic rent was being earned.

Absolute rubbish. But please don’t take my word for it take the courts view. The plate value isn’t earnt; it has no goodwill attached to it. Someone has to pay for the ‘plate premium’, and the mug punter fits the bill nicely.

We believe that the variables used by Halcrow were incorrect because:(a) Taxi Licence Premium is the actual purchase price of a taxi licence, and not the estimated resale value of licence, as used by Halcrow.

How can it be incorrect? Are we now saying that people pay tens of thousands of pounds for something, and then sells it for less? Hmmmmmmmm.

To give an example: if a licence cost £12,000, the discount value is 15%, so the net return is 15% of £12,000 which is £1,800. The average fare is £6.33 for a 4.7-mile trip, and the taxi did 8,650 trips per annum. Therefore the net return (£1,800) divided by 8,650 trips equals 0.21. Therefore the abolition of the licence assuming economic rent was being earned would result in a price reduction of 3.3% or 21p per trip.

Some people really do live in cloud cuckoo land. If the T&G are going to talk numbers, then please lets not fantasize. Apparently we all do 8,650 trips a year, each averaging £6.33. I wonder how many of us will be declaring earnings of £54,754.50p on our next tax return?

However, we accept that what is commonly referred to as the sale of plates is in fact for many people the sale of a business – ie taxi vehicle with licence attached. If there were to be legislative proposals, which impact on the value of such businesses, there must also be an adequate compensation scheme. Legislation should not result in the ruination of genuine, committed owners who have mortgaged their future in order to enter the trade, earn a living and provide for their retirement.

Some may not have noticed, but the legislation has been in force since 1985. Anyone who has bought a plate since then has gambled on a future re-sale value. Like most gamblers they may well lose. However unlike most gamblers, the T&G are expecting the taxpayer to bail out those chancers in the taxi trade.

This is the OFT having two bites at the cherry. If it does not get the legislative change then the LA should use the existing legislation to move to de-restriction by using vague “unmet demand” arguments. Or use their existing powers under the 1986 Act to delimit irrespective of the situation in regard to unmet demand.

Hear, hear!!

Also would customers be likely to phone around other taxi firms to try and get a lower price? If they could not get a lower price elsewhere then the customer would go back to the original firm, but with no guarantee of getting the same price if the firm realised that other firms were charging more for the trip.

Don’t the T&G realize that this is commonplace already? Customers aren’t stupid; they will get the best deal they can.

We reject the implication in the report that that it may be appropriate to dilute the existing vehicle licence conditions. The T&G believes that most of the metropolitan conditions of fitness, particularly with regard to wheelchair access, length, width, tight turning circle and separation screen continue to be appropriate for London and most major cities.

I see no mention about the jobs for the boys in the Midlands. It appears the T&G are content to allow the cab drivers the length and breadth of the country to carry on paying through the nose for their tools of the trade. Quite happy to promote the turning circle, which has been deemed as being un-safe by the recent review in London.

Brighton: excellent relationship between Trade representatives, Council and disability users groups with regular surveys to match supply and demand. Again this has delivered a high quality accessible fleet, responding to demand with a gradual growth policy.

Yet another piece of T&G mythology, but why should they let the facts get in the way? Brighton has surveyed taxi un-met demand once, yes that’s right once, in the last 12 years. Is that what the T&G call regular? Is that what the T&G mean by gradual growth? On the subject of Brighton, do the national T&G support their local members who voted to keep the station closed to their fellow HC colleagues? Does the ‘free and open’ policy only apply to others, but not the T&G? Now what’s that word beginning with H?

A national pricing formula should be introduced outside of London which would be used by all local authorities and unitary authorities to set the price of taxi fares. The Cost Index employed successfully in the capital for many years could be used as a model. This would reduce the risk of the consumer being exploited but would still be responsive to the local issues.

Yes it had to be in there somewhere. Pages and pages of out-dated dogma, but in a field of weeds, out pops a rose of a policy. A fare formula is the only sensible way forward, for those who wish to earn a reasonable wage, in reasonable hours.

The T&G has consistently lobbied for new legislation that would replace the antiquated and piece meal laws in place at the present time. The taxi trade and its millions of customers require a new National Cab Act to safely and sensibly regulate a high quality, expanding but sustainable sector of UK’s public transport system. To focus on what is essentially the most contentious and controversial aspect within the industry, with the de-regulatory emphasis of the OFT recommendations, while neglecting everything else, will prove to be both retrograde and confrontational.

The T&G could be a great good for the cab trade; it has contacts in high places and massive legal and financial back up. Which is at the disposal for members, for only a few quid a week. Alas, it’s Cab section has been hi-jacked by the vested interest brigades, who care little about the licensed trade, but care plenty about the plate premium. By supporting the status quo the T&G are supporting a system that has been proved to discriminate against working women, against ethnic drivers, and against those in society who are unable to finance the black market plate premium. It blindly supports a small clique of drivers, and ignores the vast majority of licensed drivers, who just want to be treated as equally as others. I have no doubt in my mind whatsoever, that this behavior from a trade union, albeit a small section, must have the founding fathers of trade unionism, the Tolpuddle Martyrs, turning in their graves.

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