Opinion:  Restricted numbers combined with disallowing plate transfers is often suggested as a panacea for the industry's ills - the evidence suggests otherwise.

International commentators on the taxi industry often claim that allowing plates to be transferred is the source of many of the ills besetting taxi drivers.

For example, in New York many taxi medallions (plates) are bought by investors for sums in excess of $200,000.  On the other hand, drivers unable/unwilling to finance a purchase of this size are generally poorly paid - medallion purchasers need a return on their investment, and this is in the form of thousands of dollars paid annually by drivers to lease each medallion.  The whole exercise thus appears to do nothing more than create an artificial investment that sucks money out of the trade.

Thus non-transferability of licenses is often suggested as the answer to this contradictory scenario of astronomical plate values and badly remunerated drivers - if plates could not be sold then this situation would simply not arise.

This was perhaps the reasoning behind transfers being barred by the licensing legislation in Scotland.  Section 10(6) of the Civic Government (Scotland) Act requires that the vehicle license and plate is surrendered to the licensing authority on sale or disposal of the vehicle.

So has this worked?  The answer has to be a resounding NO!

When numbers are restricted then plate holders have no incentive to return their plate and will tend to keep hold of it in Scotland, since it cannot be sold.  There seems no reason why this cannot continue until death - thus as new drivers come into the trade and no new plates are issued, a scenario of absentee plate holders will arise, comprising largely of retired drivers or those who have left the trade to work elsewhere - these absentees could easily retain a plate for several decades after leaving the trade.

In recent years this major shortcoming has been ably demonstrated in Dundee, where industry sources claim that the majority of the taxis have been operated by those with little involvement in the trade.  Although in Dundee this issue was highlighted recently in the form of illegally hired plate, the problem is not confined to that - many absentee plate holders run vehicles legitimately, and indeed if plate hiring could be eradicated then there would be nothing to stop absentees running vehicles perfectly legally.

Of course, these problems will arise wherever numbers are restricted and transfers barred - numbers were de-restricted in Inverness to deal with problems like plate leasing.

Another major feature in Scotland arising from transfers being barred is the idea of the corporate license.  Here an individual license is swapped for one in the name of a partnership or company.  This effectively allows the license to be sold without requiring a transfer - the license continues to be in the name of the partnership or company.

The interesting part of this is how the license comes to be 'transferred' from the individual to the partnership or company.  In fact it is not transferred, but simply surrendered and a new license issued in the name of the partnership or company.  Thus the individual who originally held the plate effectively jumps the queue for new plates, with those in the queue subsequently having to pay perhaps £30,000 for the dubious privilege of being bypassed!

Indeed, it has been suggested that this process could be deemed illegal if challenged, since anyone waiting for a taxi plate might have a 'legitimate expectation' that current plate holders would not be given preferential treatment when new plates are issued.

Moreover, it seems that this process (used in Glasgow and Edinburgh) might not be required at all - a footnote hidden away in Annexe A of the Office of Fair Trading's report seems to suggest that some licensing authorities merely allow the old plate to be handed in and a new one issued in the name of the buyer, with the buyer effectively paying for the plate, as is the norm in England and Wales.

Thus with transfers effectively being legalised in cities like Glasgow and Edinburgh, and a coach and horses effectively driven through the ethos of the legislation, it seemed strange that last year's Scottish Executive consultation on the licensing legislation seemed to endorse that ethos without further comment: "The Task Group take the view that the provisions in the Act preventing the transfer of licenses continue to be justified…"

It should thus be clear that disallowing transfers simply doesn't work - the trade effectively becomes controlled by absentee plate holders or, in the particular case of Scotland, a rather sophisticated but underhand method is drawn up to foil the rule.

The bottom line is that restricting taxi numbers amounts to limiting the 'tools of the trade', and this would simply not be tolerated in any other trade or profession, but this gives one set of people control over the trade to the detriment of working taxi drivers.

There is no way round this - the only solution is not to restrict numbers.

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