TAXI FARES (Hansard, 1 August 1978)

I am grateful to you, Mr. Deputy Speaker, for calling me to take part in the debate.

First, I have an interest as the majority of London taxi drivers live in my constituency of Redbridge-Ilford, North. It has been known for some time that they have had a claim for a fare increase of about 28 per cent. The Government have continually claimed that the trade is entitled only to an increase based on the Government's wage guideline of 10 per cent. I consider that assumption to be wrong and I shall try to go about proving why I think it wrong.

The cost of taxis in the past few years has almost doubled. The cost of diesel fuel has increased by 50 per cent. We must remember that the amendment to the 1977 Budget effected a reduction in the cost of petrol but not in the cost of diesel fuel. The reduction in the cost of petrol was of no benefit to the licensed trade.

If we compare licensed trade fare increases for taxis with other increases, we arrive at some interesting facts. The facts have been put before the House before but I think that they need to be repeated. British Rail fares from January 1975 to January 1977 increased by 93 per cent. During the same period London Transport fares increased by 126 per cent. while Underground fares increased by 147 per cent.

It has been reported in the national press—this causes me some concern—that due to a certain amount of hardship taxi drivers who are inexperienced mechanics are now beginning to maintain their own vehicles. I ask the Under-Secretary of State whether she knows anything about that and whether any research has been done by the Home Office or by any other body to ascertain whether the public are in danger as a result of drivers servicing their own vehicles who may not be experienced in that work. Clearly they are doing so to save money because of the present situation.

I refer to the Adjournment debate on 8th March. The Minister said that the trade was growing in size. I have spoken to taxi drivers and the taxi organisations 614 and I have heard rumours that many firms have gone bust since March. Is the hon. Lady able to inform us how many taxi firms have ceased to exist since March and how much unemployment that has caused?

The Minister spoke of taxi fare increases over the years since 1975. She said: As for the hon. Gentleman's second question, fares have been substantially increased since the middle of 1975. There was an increase averaging 30 per cent. in July of that year. A further increase of 10p per hiring—that is, 13 per cent.—took place in December 1976. There was a third increase of 10 per cent. in December 1977. These increases represent a total increase of 61.6 per cent. over the early months of 1975. If that is the case, it is interesting to note that the Minister also said that the average increase that the taxi drivers were asking for on an average journey was 25 per cent. If that were to be added to the 61.6 per cent., we should be talking about a fare increase of 86.6 per cent. over the same period that British Rail increased fares by 93 per cent., London Transport by 126 per cent. and the Underground by 147 per cent.

There is another interesting factor about which I should like clarification. Of the 61.6 per cent. increase that the Minister claimed the licensed trade received during that period, how much was attributed to wages and how much to costs due to inflation, taxation and so on? It was not clear in the debate on 8th March exactly what percentages fell where. It would be useful to have that information for clarification.

It would appear that there is some justification for the claim that the taxi drivers are making. But I am particularly disturbed, perturbed and worried that this matter has gone on being protracted for some time now.

In the Adjournment debate on 8th March we were told: The hon. Gentleman asked two specific questions about the Price Commission. He asked for an assurance about when the Price Commission would report. My right hon. Friend the Secretary of State for Prices and Consumer Protection has directed the Price Commission to examine the prices, costs and margins of the taxi and private hire trades and to report to him not later than 30th June. I have no reason to expect other than that it will report by that date."—[Official Report, 8th March 1978; Vol. 945, c. 1574–75.] 615 We have now gone well past 30th June and we still have not received the report from the Price Commission. I understand that it is likely that the report will be received by 30th September. But are we then to be told that it will be 30th December? Will the matter go on and be protracted still further?

I am very concerned about this matter, because we also received an undertaking that, by getting that report by 30th June, if the Price Commission were to agree to a fare increase, it would help the licensed trade during the tourist season in the summer months. That has now been missed. Any report on 30th September, if it should allow an increase, will mean that the tourist trade will have been missed this year.

I wonder whether the stalling by the Government, the Price Commission and others has anything to do with what hag been mooted in the past—the possible nationalisation of the taxi service. We heard that from the GLC 12 or 14 months ago. I should like clarification by the Minister on whether the Government have any plans now or in the not too distant future to nationalise the taxi service.

The Under-Secretary of State for the Home Department (Dr. Shirley Summer-skill)

I know from the correspondence that I have had with the hon. Member for Ilford, North (Mr. Bendall) that he has taken a great interest in this subject on behalf of his constituents.

First, I should like to outline the general position before coming to particular matters. In England and Wales outside London, the primary responsibility for fixing taxi fares lies with the district council. It may exercise powers to control taxi fares under the Town Police Clauses Act 1847, under the Local Government (Miscellaneous Provisions) Act 1976 or under local Acts. In all cases, it would be expected to have regard to national policy on pay and prices and to the need to win the battle against inflation. In those cases where taxi fares are fixed by bye-laws made under the Town Police Clauses Act 1847, my right hon. Friend the Home Secretary is the confirming authority and therefore has a direct influence over increase in fares 616 In London, taxi fares are determined directly by my right hon. Friend. These fares apply to all taxi journeys in London, whatever their length, provided that they begin and end within the Metropolitan Police district. The responsibility has rested with the Home Secretary for many years. I believe that the original purpose in regulating London taxi fares was to achieve uniformity, but over the years it has been necessary for various factors to be borne in mind in determining the appropriate fare scale.

The normal procedure has been for representatives of the London taxi trade to make proposals for fare increases which are then discussed with Home Office officials before an order is made. These discussions have proved difficult in recent years because of the absence of reliable factual and statistical information, which is what the hon. Gentleman asked for, particularly in relation to drivers' earnings. It has nevertheless become increasingly recognised in recent times that there is a relationship between the level of taxi fares and the level of drivers' earnings. This may seem obvious to the outsider, but the hon. Gentleman and those involved in the trade will know that the very variety of arrangements between vehicle owner and vehicle driver makes it difficult to reach general conclusions on the mathematical relationship between the level of taxi fares and the level of drivers' earnings.

The hon. Gentleman raised a number of specific points. I do not believe that one can compare taxis with British Rail and London Transport, which are far larger and have huge infrastructures—unlike taxis. He mentioned vehicle maintenance and I refer him to my letter of 19th June in which I replied to that point which he had raised in correspondence.

There are about 12,000 licensed taxis in London and about 16,000 licensed drivers. The number of owners of taxis has increased steadily since 1972. It is now 7,464. The number of drivers of taxis has increased steadily since 1972 and now stands at 16,474 and the number of taxis has increased steadily in the same period and now totals 12,452.

The arrangements under which these taxi drivers operate vary considerably. There are some drivers who own their 617 own taxi. There are some who rent their taxi by the day, or week or longer. In this case, the drivers either pay a fixed daily or weekly rental, or share the daily takings with the owner of the taxi in predetermined proportions. This rather complicated variety of situations means that discussions on changes in the level of London taxi fares need to take into account the separate interests of the owners of taxis, as well as the interests of drivers and of the travelling public.

If fares are too low, there is insufficient incentive for the vehicle owners to invest in new taxis. There is also the risk that a shortage of funds will lead to lower standards of vehicle maintenance. Over a period, low fares could lead to a decline in the number of taxis operating and a worsening of the service to the public. If, on the other hand, fares are too high, this may lead to a reduction in the use of taxis by the travelling public, with a consequent falling-off in takings by taxi owners and taxi drivers.

Increases in London taxi fares were approved in July 1975 and December 1976. A further application for a substantial increase in London taxi fares was made a year ago, in July 1977. This application was for an increase of 10p in the initial hiring charge of 30p and for the time and distance rate of 5p for each 450 yards to be doubled after two miles. Because of the combination of a fixed and a variable increase, the total effect of this claim, if granted, would have varied for different journey lengths. The increase for a short journey of half a mile would have been 33 per cent., while the increase for a journey of four miles would have been 60 per cent. The fare increase on the typical two and a half mile journey would have been 25 per cent.

This claim was very carefully considered and the viewpoint of the London taxi trade was listened to sympathetically by my right hon. Friend the Home Secretary at a meeting last November. It became clear that it was necessary to look more deeply into the basic cost structure of the taxi trade and it was therefore decided that the Price Commission should undertake such a study and that this study should be extended to cover the costs and margins of both taxis and private hire cars throughout Great Britain, to provide a broad picture of the cost structure of the trade as a whole.

618 My right hon. Friend the Secretary of State for Prices and Consumer Protection announced in December that the Price Commission would make such an inquiry. On 6th December 1977 my right hon. Friend the Home Secretary made an order increasing London taxi fares with effect from 22nd December 1977, as an interim measure. This was an increase of 10 per cent. on the metered fares while this report was prepared. Such an increase was the most that could be justified in the circumstances and would enable owners to obtain a reasonable increase to meet rises in operating costs and would provide an increase in drivers' earnings.

I am sure that the representatives of the London taxi trade will have taken the opportunity to place before the Price Commission all the statistical and other information in their possession about costs and margins. I hope that the Price Commission will be able to indicate in its report what proportion of the metered fare and of extras—for additional passengers and baggage—goes towards the maintenance of the vehicle and how much is available for the driver personally. These are basic pieces of information which are necessary if the fare is to be calculated fairly.

I understand that the examination by the Price Commission, which is complicated, has taken longer than was originally expected. My right hon. Friend the Secretary of State for Prices and Consumer Protection now expects the Price Commission to submit its report before 1st September—not the 30th, as I think the hon. Member believes. I understand that the report will then be published and that there will be an opportunity for all concerned to submit their views on the conclusions. These views would naturally be taken into account by the Government in any future discussion on proposals for a further increase in London taxi fares. Discussions would need to take account of current policy on pay and prices, but I hope that the report will enable these discussions to be based on more reliable statistical information than we have had in the past.

I recognise the strength of feeling on London taxi fares. However, the Government considered that the claim last year by the trade for increases of up to 60 per cent. in London taxi fares could 619 not properly have been granted at a time when other members of the working population were being expected to keep their pay increases to 10 per cent.

The continuing fall in the rate of inflation will be of significant benefit to the owners and drivers of taxis in London, as well as to the population at large. The continuing increase in the number of taxis and of drivers in London each year suggests that this is still a flourishing industry. The Government hope that the Price Commission's report will enable future discussions on the appropriate level of taxi fares in London and elsewhere to be based on a full understanding of costs and of margins in the trade.

I believe that it is in the interests of all concerned that owners should be able to maintain their vehicles properly and that drivers should be able to obtain a reasonable level of earnings. At the same time, we need to bear in mind the interests of the travelling public. To balance these various interests is not an easy task, but the report will be of vital importance in helping us to do so.