Licensing of ride-hailing apps in England

Almost all stakeholders recognise the benefits of ride-hailing platforms to reduce congestion, pollution and reliance on private car ownership. The growth of ride-hailing platforms anticipates cleaner, safer and more inclusive future mobility options. The support of government, at the local authority and central levels, is essential to enable these technology-based businesses to thrive.

Probably the best known ride-hailing platform is Uber. There are several alternatives, many of which have been established in international markets and are now setting up in the UK. These include Ola, Kapten and Bolt, although this is by no means an exhaustive list.

One of the major barriers to entry in London, in particular, is the currently complex licensing framework. Changes are needed to simplify the requirements and streamline the industry, while leading to further improvements in safety, affordability and convenience. The complexity across the UK as a whole is demonstrated by the fact that we are only focusing on England and, in particular, London here.

The UK government recognises that transport, including technology-powered private vehicle hire ride-hailing platforms, is a key opportunity to keep London on the centre stage as an innovative city. It has therefore identified future mobility as one of the first Grand Challenges to promote London's productivity and ability to adopt changes for the better.

The current regulatory environment

Under the UK's current laws, licensing for private hire vehicles is undertaken at local authority level. This leads to variations in licensing arrangements across the UK, including regarding pricing, processing times and safety checks.

The uncertainty and complexity of these local differences can pose issues for incumbents and new entrants alike, particularly those establishing themselves in London where the concentration of local licensing authorities is most keenly felt.

The laws relating to taxis in London are over 400 years old and still refer to stage coaches and stage carriages. Legislation for private hire vehicles in England is younger, dating from the 1970s. However, these more recent laws are by now also archaic as they were based on the concept of a mini-cab office, generally situated at a physical address near a railway station, whereby users could walk or call in and book a vehicle and driver. This model is almost completely outdated, as users want and expect to be able to book a car and driver online, using an app, and the platform has largely replaced the physical office.

There have been teething problems with some private hire vehicle operators, with complaints about inadequate safety, driver treatment and complex contractual arrangements. The platforms themselves are proactively addressing such issues, by introducing more rigid driver screening processes and implementing in-app safety features.

It is often these technology-enabled elements which are seen to give the platforms a value-added proposition against the traditional private vehicle hire arrangements. Updates to the regulatory regime will support the platforms' own efforts to create a sustainable private vehicle hire system across England.

The first step to regulatory reform

It is clear that England's legislative regime is no longer fit for purpose when applied to today's ride-hailing platforms. In recognition of this, the Law Commission published its 2014 report on taxi and private hire services at the request of the Department for Transport. This report highlighted the various inconsistencies across England's hundreds of licensing authorities, including varying safety and training requirements.

The report made a series of key recommendations, including:

• retaining the two-tier system in which taxis and private hire vehicles are regulated separately
• relying less on a right to 'ply for hire' to distinguish taxis from private hire vehicles
• clarifying drivers' rights to carry passengers outside the borders of the authority in which they are licensed
• creating a set of national standards for drivers, vehicles and dispatchers.

The continuing drive for regulatory reform

In September 2018, the Task and Finish Group on taxi and private hire vehicle licensing released a report in which it made 34 recommendations to amend and update regulation of the private hire industry.

Among these recommendations was support for the Law Commission's recommendation that national standards ought to be adopted.

In response, the Department of Transport issued its report on taxi and private hire vehicle licensing in February 2019. The key messages of the report were:

• an acknowledgement that the industry is moving rapidly and technology is advancing quickly, such that recommendations in the 2014 report have already been surpassed by new needs for reform
• a reaffirmation of the need for a national approach, including national standards, licensing databases and enforcement powers.

Cross-border working, in which drivers are permitted to work outside the boundaries of their licensing authority, is another issue raised in these reports. This is particularly relevant to the ride-hailing platforms, and greater clarity will be welcomed. The government has committed to considering this.

What's next for ride-hailing platforms?

While there are no firm timeframes for making the necessary changes, ride-hailing platforms, government agencies and the public are actively engaged with reforming the system and positive results are likely to follow.

It is clear that the regulatory environment as it stands needs to be updated, and until then, ride-hailing platforms will continue to face a complex web of local requirements and outdated legislation.

While the platforms have so far managed to overcome these problems, there is a real need for the recommended national licensing system to be implemented quickly and efficiently to support growth and competition among ride-hailing platforms.

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