This is a case of significant importance for Local Authorities throughout the country for, in quashing the Council’s decision to set licence fees in January 2017, the High Court has determined that the taxi licensing regime is not subject to a general proposition that it ought to be self-financing. This means that Councils may be left to subsidise taxi enforcement heavily within their districts and that this burden will inevitably fall upon local rate payers.
Mr Rehman brought a claim for Judicial Review against Wakefield’s decision to set licensing fees for the next two years. Following the case of R (on the application of Cummings) v Cardiff City Council  EWHC 2544 (Admin) it is well known that Councils ought to separate out the five streams of taxi licensing (comprising vehicles, drivers and operators), when collecting their licence fees. It is also settled law that there must be no cross subsidy within these streams. Councils must not use the licensing fees as an income generating scheme.
Against this background, Mr Rehman took issue with the Council’s assignment of enforcement costs relating to drivers to private hire vehicle licence fees which he said did not constitute costs associated with the “control and supervision of vehicles”. This definition is taken from s.70 (2) of the Local Government (Miscellaneous Provisions) Act 1976. The difficulty confronting all Councils is that the fees for driver’s licences are set pursuant to s.53 of the Act which allows for “such a fee as they consider reasonable with a view to recovering the costs of issue and administration” in relation to the grant of the licence. The conundrum has always been whether the driver’s licence fee covers ongoing driver enforcement.
The claim for Judicial Review was made in such a way that restricted the Court to an interpretation of s.70(2) only. Wakefield resisted this approach, seeking a comprehensive resolution to the issue of statutory construction, but Mr Rehman resisted, preferring a narrow approach. The Court (HHJ Saffman) determined that matters associated with control and supervision of drivers (such as overcharging and smoking) could not be assigned to vehicle licence costs under the term ‘control and supervision [of vehicles]’. He also considered that it would not necessarily follow that such costs would be properly incorporated into driver’s licence fees under s.53(2) either, although he was not conclusive on that point. He rejected Wakefield’s suggestion that the regime ought to be self-financing on a full costs recovery basis, and suggested that no such general principle was in operation. If enforcement costs relating to drivers do not properly come under the ambit of ss.53(2) or 70 then it followed that they were not recoverable through the fees structure at all, but he made no final ruling other than in relation to section 70 which certainly cannot be used to justify the driver enforcement element of cost. The Court rejected the contention that such a general principle of full cost recovery for the licensing scheme could be derived from Hemming and other preceding case law.
It was accepted that since 2004/5 Wakefield Council had not recovered the full costs of the taxi licensing regime through their fee structure in any event, and had subsidised the taxi fees to the tune of over £300,000. The impact of this decision could mean that the figure should have been much higher.
Despite being taken to the seminal texts of Paterson’s and Button on Taxis which accept that there is ambiguity in respect of the recovery of enforcement fees through the regime, and seemingly accepting that there was some point of general importance at stake, the Court refused permission to appeal. The Council is therefore considering its position.
Wakefield Council was represented by Sarah Clover and Ben Williams in Chambers.
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