Private hire vehicle operators lose High Court battle over TfL fee changes

A High Court judge has rejected a legal challenge brought by private hire vehicle operators over changes introduced by Transport for London to its licensing fees structure.

The background to the case of LPHCA Ltd (t/a Licensed Private Car Hire Association) v Transport for London (TfL) [2018] EWHC 1274 (Admin) was that TfL decided in August 2016 that it needed to employ 250 compliance officers for its compliance and enforcement work in relation to certain licensable activities, making a total of 332 compliance officers, plus the existing 50 support staff.

This increase in staff numbers had to be paid for out of the fees charged for the licences. At the same time, the existing fee structure for private hire operators' licences was to be re-examined.

In April – June 2017, TfL carried out a consultation on those fee changes so far as they affected private hire operators. This was the only group of licensees significantly affected by the changes.

The claimant, the Licensed Private Hire Car Association (a national association of private hire car operators, with 200 members), complained in its response to the consultation about a lack of financial information made available, and objected to the changes.

On 18 September 2017, the Finance Committee of TfL decided to make changes to the fee structure for private hire operator licensing, with some amendments to those originally put forward in the consultation. That decision was given effect through the Private Hire Vehicles (London) (Operators' Licences) (Amendment) (No.2) Regulations 2017, the Regulations.

The claimant association challenged the decision and the Regulations on two bases:

1. The consultation process was unlawful because TfL failed to provide adequate information to permit of an informed response on the financial basis for the changes; whether the information was adequate or not rather depended, as the arguments evolved, on what the true scope of the consultation was;
2. The apportionment of additional costs to private hire operators, rather than more to taxis, and to private hire drivers and vehicles, was unlawful because it involved a cross-subsidy from private operators to other licensees; the issue was whether such a cross-subsidy in fact was created. It was not at issue but that a cross-subsidy would have been unlawful.

Mr Justice Ouseley rejected the challenge. On ground 1 he said: “I have come to the conclusion that the true scope of the consultation, intended by TfL, did not cover the way in which £38m was the costs of licensing regime attributed to operators, and was confined to the structure whereby operators' fees would raise that sum.

“Accordingly, there was no unlawful failure to disclose the information about how that was worked out, in order for consultees to be sufficiently informed about the proposal actually under consultation in order to make an informed response.”

On the cross-subsidy point, the judge said: “What TfL have done is to produce a reasonable method, with some evidence, to which reasoned judgment has been applied. It has not been shown to be wrong on its face, and on the analysis which I have had, I am not persuaded that there is any unlawful subsidy.

“If the Mayor did intend to convey that operators would pay a fee for costs which properly belonged to taxis or drivers or vehicles, the TfL officers have not in fact carried through any such intention. It would have been unlawful, had they done so.”

An accusation, that TfL had in fact deliberately achieved a cross-subsidy while denying it in its words, was not justified, Mr Justice Ouseley added.