Private hire car overprovision: independent assessment tool for local authorities

3 Use of Available Information

3.1 Vested interests

The reliability of information is likely to vary according to the source of information. Existing knowledge of the licensed vehicle trade possessed by officers concerned with licensing is likely to be highly reliable. Licensing records are also highly reliable. Some information provided by the licensed vehicle trade may be influenced by vested interests of those providing the information. For example, if a large business providing private hire services could benefit from a restriction in the availability of private hire car vehicle licenses, they may be inclined to offer information which they feel supports their preferred outcome. For example, providing selective information regarding increased numbers of drivers and low frequency of hires per driver. Where information is gathered from sources which could be subject to influence by vested interests, it is prudent to gather information from a variety of such sources. For example, if information is provided by large businesses providing private hire services, discussion with drivers regarding when they are busy or quiet and how many hires they typically undertake per hour at such times, can corroborate the information.

3.2 Corroboration of information

When seeking conclusions regarding whether overprovision of private hire cars exists or would exist if more were licensed, it is prudent not to rely excessively on one element of information. It is normally possible to use several different forms of information to derive corroborating information.

3.3 Accounting for local operating characteristics

Not all private hire cars operate in the same way. For example, in some areas, a large fleet of private hire cars may work for a single company which runs a busy booking office. Such vehicles may be kept busy through the booking system and undertake a high number of hires each day. A small number of such operators may dominate activity within an area. However, other private hire cars in the area may be independently owned and operated. Such vehicles may undertake fewer hires per day and have longer waiting times between successive hires. As a further example of diversity of operation, some private hire cars focus on pre-booked hires for longer journeys, such as airport transfers, chauffeur services and tourism hires. Such operations may not participate in on demand hires, such as at busy times on a Saturday night. It is important to understand the mix of provision of pre-booked hire services in an area, in order to assess the adequacy of provision and whether it may be considered that there is overprovision.

The density of provision of licensed vehicle services relates to population density and proximity to demand generators. In large urban centres, there is often a relatively large supply of taxis and private hire cars providing capacity for immediate hire. Generally, available vehicles are relatively close to passengers seeking to book a hire and passengers only have to wait a few minutes for a vehicle to arrive. In rural localities, the available licensed vehicles may be more widely dispersed. This can lead to longer wait times for a booked vehicle to arrive. What is considered to be normal service levels can vary according to location. For example, in urban localities, it is common for passenger to book a licensed vehicle for immediate travel, as the requirement arises, in the expectation that a vehicle will be available in a few minutes. It is not uncommon for travellers to try an alternative provider if the initial booking enquiry results in a potential wait of say 20 minutes. In rural localities, immediate availability may be less likely. It can be common for travellers in rural localities to anticipate the time taken for a licensed vehicle to reach them and to book a vehicle ahead of the time when they are likely to need one. For example, booking an hour or two ahead, to ensure the provider can fit them in on their schedule of booked hires.

Seasonal variation in demand can be a significant factor in evaluating the adequacy of provision of private hire services. Businesses providing private hire services in locations where demand is heavily influenced by seasonal tourism may struggle to survive during the off season. In such circumstances, it is prudent to consider variation in seasonal demand along with variation in demand through a typical week.

As the licensed vehicle market evolves with the use of technology, some business models implement variable prices for fares, related to the level of demand. In such models it is cheaper to travel during periods of lower demand and more expensive to travel during periods of high demand. Licensed vehicles fitted with taximeters, may be constrained if operating in such businesses. Commonly, if a taximeter is fitted to a licensed vehicle, this sets the maximum fare which may be charged. Even if a fare is calculated with an app based process on a mobile device, if present in the vehicle, a taximeter should be active to determine what the maximum chargeable fare should be.

Some business models, utilising variable pricing, may seek to charge prices at peak demand times, which would exceed those shown on a taximeter. In order for such businesses to enter the market and become established within a licensing area, there may be some encouragement for new drivers to become registered. In localities where it is common for private hire cars to be fitted with a taximeter, there may be some incentive for additional private hire cars to be registered, without having a taximeter fitted.

3.4 Consideration of how services are provided

Actual supply of pre booked hire services to the public, in a particular locality, may be services provided solely by private hire cars, solely by taxis, or by a mixture of both. The general public often does not distinguish between these two elements of what can be termed 'licensed vehicle service'. When assessing the level of provision of private hire cars, it is prudent to also consider the role that taxis may play in the pre-booked hire market.

Taxis enjoy greater flexibility than private hire cars regarding the means by which they can be hired. Consequently, the operation of a taxi rather than a private hire car, for undertaking hire for reward work, is often a more attractive option for licensed vehicle owners and drivers. They often see the operation of a taxi as offering enhanced earning opportunities, compared with a private hire car. The enhanced earning opportunity is principally associated with the potential for waiting at a taxi rank and enjoying the increased chance of obtaining a hire either from a passenger arriving at a taxi rank or from a booking, either through direct phone call to the driver or vehicle owner, or through a third party booking service, such as a booking office or app based online service.

Some taxis concentrate purely on obtaining hires at taxi ranks or through flag down hires. However, increasing use of mobile and smart phones to obtain the services of licensed vehicles has led to a decline in the market share of rank based hires and increasing reliance, by taxis, on hires obtained through other means, either as an alternative to rank based hires or in order to supplement rank based hires. Furthermore, from a passenger perspective, the level of certainty and service provided by obtaining the services of a licensed vehicle by phone, mobile app, or web site, with the additional option of going to a rank to obtain a taxi, can be very enticing.

There are also cases where those entering the private hire market chose to operate taxis rather than private hire cars from the outset, knowing that a taxi could supplement income from phone bookings by servicing ranks, or indeed by being able to legitimately be hailed principally when returning from bookings. This might often be the case where there is no limit on taxi numbers in an area.

3.5 Assessing the scale and structure of operations

As discussed earlier, private hire cars may operate in a range of different ways and pre-booked hires may be undertaken by either private hire cars or by taxis. In order to understand how the trade operate in particular locations some high level assessments can be undertaken. Considering private hire cars only, do some private hire cars primarily engage in undertaking advance booked longer trips, such as airport transfers, tours or chauffeur hire? Do some private hire cars engage primarily or solely in fulfilling transport contracts, such as school transport contracts? Are some private hire cars primarily engaged in immediate hires, such as trips home from shopping or night-time leisure activities?

How private hire cars obtain their bookings can also help with appreciation of how they operate. For example, telephone bookings made directly with the vehicle operator / owner / driver, versus bookings made through a booking office.

If it is known that a significant proportion of taxi hires are obtained through direct telephone or booking circuits, it may be prudent to undertake a similar assessment of pre booked hires undertaken by taxis in addition to any assessment of private hire cars.

If the majority of licensed vehicles are controlled, to some extent, by a small number of individuals or organisations, this can affect how and at what times drivers operate licensed vehicles.

Control could be considered to be:

• Licensed vehicles which are owned by a third party and leased or rented to a driver,
• Drivers or vehicle owners paying to obtain hires through a booking office or booking circuit,

There are two principal structures within the above - those working directly for a company and the more collaborative format of a co-operative, both of which have different implications on what is actually undertaken.

The most readily available means of assessing the level of control is to consider multiple vehicle licenses held by single individuals or companies; or booking offices which handle bookings for larger numbers of licensed vehicles. Licensing registers can be used to assess the number of individuals holding multiple licenses. However, the number of vehicles which obtain bookings through booking offices may normally only be obtained by contacting the booking offices and asking how many vehicles that they handle bookings for. Normally, businesses operating booking offices are happy to provide this information.

The majority of licensed vehicle drivers are self employed and follow a diverse range of working patterns. Some drivers operate on a part time basis for limited hours each week, or even on an ad-hoc basis. Other drivers may operate most days for extended periods. There is limited information available regarding what working patterns are followed and details can be difficult to ascertain. Information obtained from booking systems should be treated with some caution in this regard. Drivers who pay to obtain hires through booking systems may be more likely to work longer hours than others who do not pay to obtain such hires.

The level of intensity of use of licensed vehicles can also help to form the depiction of how both taxi and private hire fleets operate. The ratio of the number of drivers to licensed vehicles can indicate whether there is significant scope for vehicles to be driven by multiple drivers covering extended shift patterns per vehicle. For example, a vehicle which is driven by one driver during weekdays during the daytime and by a second driver at night, such as on Friday and Saturday nights. Some vehicles could be used by one driver to cover contracts, such as school contracts and by a second driver to cover evening demand.

There is, however, an issue regarding retention of driver licences when someone either determines they no longer wish to operate in the industry, or if they do not regularly drive, or if they retain the licence as an insurance in case they wish to supplement other incomes. This can depend on the length of licence issued and how it is charged for. The worst case is where someone pays up front for a licence for three years in full. In some cases, the way in which the record of issue is held and reviewed can complicate this. The system used can determine this - e.g. some systems automatically over-write with renewals, others leave the old record there but known as expired only when specifically checked.

3.6 Ratio of drivers to vehicles

The degree to which public demand for licensed vehicles (for immediate hire) is satisfied depends both on the number of vehicles and the working patterns of drivers. Some private hire cars may undertake regular contract hires, such as school transport contracts. Indeed, some private hire drivers only undertake such hires and do not undertake immediate hire in response to bookings by the public. However, in some instances, the vehicles used to fulfil such contract hires are also used, by other drivers for other types of hires, including those for immediate hire. Some drivers prefer to work on a part time basis. Many of these part time drivers may be licensed vehicle owners who do not allow other drivers to operate the vehicle for hire at other times. Some licensed vehicles are used intensively for extended periods each day and by multiple drivers.

Some licensed drivers may own one or more licensed vehicle(s), but rarely drive the vehicles themselves and rely on other drivers to drive the vehicle(s).

The operation of a vehicle may be shared by an owner and an additional driver.

With a mix of operational characteristics amongst licensed vehicle owners and drivers, it is important to view provision, not just in terms of the number of vehicles, but also take into account the prevailing operating characteristics amongst the fleet.

Some information may be available from school transport contract information. Anecdotal information may be available to provide some indication of the proportion of drivers who work part time, versus full time. It may also be feasible to obtain information from drivers through surveys

3.7 Length of experience of drivers

A potential symptom of overprovision of private hire cars is that drivers find difficulties in earning sufficient income. A consequence of such a feature could be a relatively high level of turnover of newly licensed drivers, i.e. drivers not renewing their license at the first renewal time after a licence has been granted. Even the healthiest trade operating bases will see some turnover of new drivers. Driving a private hire car or taxi is not for everyone and some people will move on to other forms of employment, even if earning levels are good. So, in addition to looking at the overall proportion of new drivers who do not renew their licences at the first renewal date, a further indication of overprovision could be a significant increase in the rate of new licence applications. However, other explanations for significant increases should also be explored, for example, has a new company commenced operating in the area and is that company actively recruiting new drivers?

The experience profile of all drivers is also worth considering. A summary profile of how long drivers have been licensed by the authority will provide information regarding the level of experience within the fleet. A common driver licence renewal frequency is three years, so, assessing driver experience by groups which are multiples of three years, may aid assessment. For example, groups could be up to three years, three to six years, six to nine years and over nine years. If the majority of drivers have six or more years' experience, this may indicate a relatively stable basis to the licensed vehicle fleet.

Having derived the profile of experience once, this can be used as a baseline for future comparisons to indicate if experienced drivers are leaving the trade. Having experienced drivers working in the licensed vehicle fleets is generally seen as a benefit to the travelling public as the driver's knowledge and experience will lead to better levels of service.

3.8 Usage of vehicles (mileage profiles)

The availability of licensed vehicles to hire, by members of the public, is influenced by the number of licensed vehicles and how intensively these vehicles are operated. A relatively small number of vehicles which are intensively used, for example with multiple drivers operating each vehicle, may provide a higher level of availability than a larger number of vehicles which operate on an ad-hoc or part time basis. Most licensed vehicles, which are owned by a driver, are also used for personal travel requirements. However, the bulk of mileage travelled by intensively used licensed vehicles is associated with hires. Licensed vehicles are subject to regular testing and inspections. The odometer mileage is normally collected at each of these tests. The odometer records can be used to estimate the annual mileage of most tested vehicles in the private hire fleet. By taking the recorded mileage from the two most recent tests (excluding re-tests) and the dates of these tests, the equivalent annual mileage can be calculated. [((mileage difference between two tests) / the number of days between tests)) * 365]. The equivalent annual mileage can then be classified into mileage ranges to provide a profile of mileage incurred.

The mileage profile can provide an indication of what proportion of vehicles are used on a full time - single shift basis. In addition, the profile indicates how many vehicles are used more intensively than the single shift vehicles and how many are operated on a part time basis.

It should be noted that some vehicle mileages will not be available for use, for example, where the vehicle has been changed between tests, or a new plate has been issued and multiple tests have yet to be undertaken. Also, the mileage indicated does not directly reflect the hired mileage for each vehicle. Some mileage will be dead mileage travelling to and from hire origins and destinations and, for many vehicles, some mileage will be incurred as personal mileage.

A mileage profile can help to quantify the effective capacity of a licensed vehicle fleet in terms of full time single shift driver equivalent.

Part time drivers may be focused on undertaking contract hires, tour based hires or chauffeur work. Some may focus on peak demand periods such as on Friday and Saturday nights, either as the only times that their vehicle operates or as additional shifts in vehicles which also operate at other times during the week. Whilst it is tempting to view part time working in licensed vehicles as a measure which limits provision, it is often the case that those working part time provide additional capacity at times of peak demand, such as 'school run times' or on Friday and Saturday night, without diluting earnings for the remainder of the fleet at other times.

3.9 Peaks in demand

Demand for private hire services varies by day of the week and by time of day and potentially, by season. A common profile of demand would be for weekday daytime hire volumes to rise slightly in the evenings and drop off late at night, whereas on a Friday evening the volume of hires may be significantly higher than during the daytime. Typically, the highest volumes of hires are on a Saturday night.

Whilst Friday and Saturday night peaks in demand are fairly typical, they are by no means universal. In some localities, the night-time economy is limited and levels of activity on Friday and Saturday nights can be low in comparison with other times of the week. Where the level of demand at peak times increases compared with other times, passengers may have to wait longer for a private hire car to be available to pick them up.

Persistent delays or lack of availability may result in complaints to the licensing authority, or indeed to the operators. Drivers often focus on working during these peak periods as the rate of hires and hence earnings can be higher. If peak demand occurs for relatively short periods and is at levels which are several orders of magnitude higher than at most other times, then it would seem unreasonable to expect the number of licensed vehicles to be increased to a level where this level of demand could be met comfortably, with no additional passenger waiting times over and above normal wait times at other times of day. Conversely, if a highly peaked demand profile exists, such as on Saturday night and the private hire fleet are easily able to cater for all hires without additional delays to waiting passengers, then this may suggest that provision of vehicles at other times may be excessive.

Whilst it can be the case that drivers focus on peak demand periods and more drivers are available for undertaking hires during these periods, it can also be the case that the late-night Friday and Saturday night provision suffers from lack of enthusiasm from drivers. These are times when drivers are more likely to encounter drunken and abusive passengers and may face increased risk of assault, or people refusing to pay fares. Consequently, the situation can exist where late at night on Friday or Saturday nights some drivers may finish work before peak demand times, after licensed premises close. If such circumstances occur, feedback from the trade is likely to corroborate this feature.

Determining the profile of demand for private hire cars can be challenging. The most direct approach can be to contact a sample of booking offices and owner drivers to obtain a sample profile of hires undertaken for sample periods on a weekday daytime, weekday night time and weekend day and night time periods. However, if it is felt that booking offices or owner drivers would be unwilling to provide information or that the logistics of obtaining such information is excessive, then alternative methods may potentially be available to ascertain the relative profile of demand at different times and whether there is sufficient provision of private hire cars at different times.

Often, private hire demand follows a similar profile to demand for taxis. So, if a survey of taxi demand at taxi ranks in undertaken, the profile of taxis leaving the ranks (both with passengers and leaving empty to respond to a booking) can be used as a proxy for the overall demand for licensed vehicles. As such, a comparative profile can be used to establish how sharp an increase in demand is.

In locations where the majority of pre-booked hires are undertaken by taxis, rank observation data may not be a suitable proxy for private hire demand. At peak times, the taxis may not visit the ranks as they are engaged on pre-booked hires. This can reduce demand at the ranks, as customers know they have a better chance of obtaining a taxi by telephoning a booking. Consequently, rank demand can fall as pre-booking demand increases. However, the opposite can also occur. In some places, private hire car operators know the level of demand they are able to meet at peak times. If they know they cannot meet this, they may either refuse bookings or simply leave calls unanswered at these times. This leads those requiring services unwilling to make prior commitment to a return journey to have to access services at ranks. This can generate high queues in the street, otherwise known as unmet demand for taxis.

Anecdotal evidence from other sources can also help with appreciation of the levels of demand at different times of day. Police are often present at locations of peak activity associated with the night-time economy and may be well placed to offer feedback on when peak demand occurs and how well licensed vehicles cater for that demand.

Profiles can be affected by contracts which usually have fixed times they can be fulfilled, and penalties if not undertaken to time.

3.10 Feedback regarding pirating activities

If the number of complaints regarding private hire cars illegally looking to pick up fares without pre-booking increases, this could be an indication that drivers are under-utilised either through lack of bookings through a booking office, or lack of direct bookings by passengers with owner - drivers. Such allegations can be difficult to verify. Increased private hire pick up activity at some locations could be as a result of effective marketing. Allegations should be viewed against other changes in operation, such as a new booking office becoming established, or new marketing campaigns taking effect.

Before reports of pirating are taken into account as evidence of overprovision, it is prudent to look for other evidence which verifies that the hires undertaken are not pre-booked and check for other reasons which could explain increased levels of pick up activity at identified locations.

3.11 Public feedback regarding availability at busy times

Private hire cars service the needs of the travelling public. As such, it is prudent to consider the experience of members of the public when considering whether the level of provision of private hire cars would be considered to be overprovision. Do members of the public experience periods when there is limited availability of private hire cars or periods when wait times for immediate hires are higher than at other times? Commonly, evidence of complaints or lack of complaints to the licensing authority are already known. However, if additional information is desired, public consultation through either face to face interviews or online surveys are a good method to assess public perception. Such views may also be obtained from key stakeholders, such as those that run pubs, restaurants or night clubs, or secondary organisations such as taxi marshals or street angel services.

Members of the public with mobility impairments are twice as likely to use licensed vehicles as the public as a whole. If mobility impaired users face particular difficulties with limitations of availability, such as, for example, limitations in wheelchair accessible licensed vehicles, then it may be prudent to give this feature some specific consideration when considering the benefit to the community provided by licensed vehicles. For example, if a cap is being considered, would a case by case exemption for wheelchair accessible vehicles be an appropriate proviso of such a cap. Considerations would vary by locality and circumstances.

3.12 Presence of transport interchanges

Transport interchanges catering for high volumes of passengers, such as mainline railway stations or airports, can be seen as honey pots by the trade. Given the potential for longer journeys and higher fares, they may generate higher levels of supply of licensed vehicles than might otherwise be expected. This can affect supply of services at other locations in the licensing area. If such main interchanges exist in a licensing area, it is prudent to consider whether this affects service provision elsewhere or at certain times of day. For example, drivers may feel that pickups from an airport carry a lower risk of threat from passengers, than picking up from a town centre late on a Saturday night. Such considerations can affect drivers choices of where and when to work.

3.13 Test booking enquiries at different times

With care, this option can be used to corroborate information provided by businesses providing private hire services and public feedback regarding availability at various times of day.