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Congestion Charge: TfL's proposals and their impact on the industry

TfL launched a consultation at the beginning of July, aiming to find ways to improve the air quality in the capital. Here, we look at these new measures and analyse the potential future developments, together with their impact on the taxi and private hire industries.

Currently, Private Hire Vehicle (PHV) drivers are required to have a pre-existing booking when entering the congestion charge zone. However, the emergence of Uber and other app-based providers has resulted in PHVs remaining in the zone whilst awaiting a booking.

The Private Hire Exemption Under Review

One of TfL’s proposals is to remove the congestion charge exemption for Private Hire Vehicles (PHVs), including Uber and minicabs. These changes would be implemented from April 2019, and would not apply to wheelchair accessible PHVs.

TfL said that the number of vehicles entering the zone each day has decreased by around 30% since the congestion charge was introduced in 2003. However, in the meantime, the number of PHVs entering the zone has increased from 4,000 a day to more than 18,000… This isn’t surprising, given that since the arrival of Uber, the number of registered London minicab drivers has risen by 66%.  Over the past two years, congestion has increased by 10%.

According to an analysis carried out for TfL, removing the exemption for PHVs “could reduce the number of individual PHVs entering central London by up to 45%.  Removing these vehicles, which often repeatedly circulate within the zone, could reduce congestion and improve journey times for bus passengers while reducing emissions.”

Notables changes applying to PHVs

  • Remove the existing exemption for PHVs – for standard vehicles, the charge is currently £10.50 with Auto Pay. On top of this, the vehicles could also have to pay an additional £12.50 for the ULEZ daily charge.
  • Increase to the amount payable for the Penalty Charge – which will now set you back £160 (previously £30), or £80 (prev. £60) if paid within 14 days.
  • Changing the NHS Reimbursement Scheme to allow reimbursement for CC Auto Pay payments.

NHS Spared but What About Schools?

Fortunately, journeys involving NHS contracts should continue to be exempt, so under strain health trusts will avoid further costs. However, a robust system for demonstrating the purpose of a PHV performing a fare of this nature will need to be put in place to avoid it being subject to exploitation. On a similar note, no exception appears to have been granted to companies fulfilling school contracts. Education budgets that have been affected severely by austerity measures could be further hit.

Would this measure actually cut congestion?

According to Addison Lee’s CEO Andy Boland,  the removal of the congestion charge exemption would represent, “A very significant cost to the industry of as much as £250 per driver, per month.” He fears that the measure could “seriously jeopardise wages” and “undermine TfL’s efforts to raise quality and safety standards.” He also accuses TfL of using the measure as a means of revenue generation.

Finally, for London’s second largest private hire operator, TfL’s proposal will not solve the congestion and environmental issues. What’s more, it could represent a safety risk, with drivers working longer hours in a single day, “as they try to pick up more fares to recoup the cost of the congestion charge.”

“The best way to control congestion and emissions is to restrict minicab licences to drivers who meet and maintain standards set by the best operators in the market rather than the current free-for-all.”

Andy Boland, Addison Lee CEO

Although his suggested alternative could be interpreted as being motivated by a desire to remove unwanted competition from the market, rather than a genuine desire to tackle congestion.

Could Black Cabs be targeted as well?

The regulator could face a legal battle from the private hire industry associations, as removing the exemption for Private Hire and not Hackney Carriage drivers could be seen as discrimination against one form of ground transport against another.

It can be argued, though, that as TfL’s proposal doesn’t apply to wheelchair accessible vehicles – Black Cabs should remain exempt, as they are all suitable for disabled users.

The Licensed Private Hire Car Association (LPHCA) has already launched an online petition to gather support against the proposals. LPHCA Chairman Steve Wright commented: “It is a very poor decision to consider Congestion Charging a mode of Transport that helps to reduce congestion, especially as London’s Licensed PHVs are probably the cleanest and greenest big fleets in the Capital.”

Risk to the Taxi Trade

The taxi trade could suffer – if the charge was extended. Black cabs drivers, on Twitter, have recently been discussing how they believe to be benefiting from a 0% rate on the congestion charge, as opposed to an exemption.


It is not beyond the realms of possibility that TfL might, in the future, seek to encourage a faster take-up of electric cabs within the trade by introducing a financial penalty, such as imposing the congestion charge on cabbies that continue to operate diesel taxis.

TfL already seems to be incentivising the use of electric taxis, by having developed signs for bus lanes only allowing “etaxis”.

The black cab trade would no doubt fight this measure wholeheartedly and would instead argue that removing the congestion charge exemption for PHV’s should be followed by efforts to  tackle the issues of over-licensing and poor quality control in the PH industry, in order to:

  • Address the problem of low standard operators.
  • Remove unsafe, uninsured vehicles and drivers from the roads.
  • Ensure a minimum level of local knowledge and language.
In summary, whether lifting the PHVs’ congestion exemption will have a significant and positive impact to congestion and air quality in the capital is open to debate. The private hire industry argues that the vast majority of PHVs are clean vehicles. They point out that potential safety issues associated with drivers working longer hours are a source of concern.
Also, the proposal could detrimentally impact private hire firms trying to operate a reputable fleet whilst maintaining a good quality of service. The increased costs to such operators would either need to be passed on to customers or potentially they could be forced to compromise on standards to recoup the loss.