The current taxi licencing regime is highly localised and inconsistent, with each of the 263 local authorities operating often vastly different licencing criteria and sets of rules. Through proposals set out within a current DFT consultation, along with the English Devolution and Community Empowerment Bill, that is all about to change.
National Minimum Standards
The Bill will establish strict, national minimum standards for all drivers, vehicles, and operators. This means a clear, legal baseline for safety and accessibility will apply across every local authority in England.
Zero- emissions vehicles
It is not yet clear as to whether the new minimum standards will mandate that newly licenced vehicles must be EVs or zero emissions, but a 2028 deadline for this has been suggested in some quarters. This appears to be the direction of travel in any event, with Transport for London having adapted this from 2023 with others expected to follow.
Cracking Down on "Out-of-Area" Working
One of the most heavily targeted issues in the new 2026 proposals is "cross-border" or "out-of-area" working. This loophole previously allowed drivers to obtain a licence in a council area with cheaper fees or less stringent checks, but then operate in a different city. Under the new proposals, the 263 licencing authorities would be absorbed into 70 larger Local Transport Authorities (‘LTAs’).
Enhanced Vetting and Mandatory Databases
With the objective of improving passenger safety, the Bill mandates that licencing authorities cannot grant a licence unless the driver meets the new national criteria, for instance enhanced DBS checks and safeguarding training.
Suspension, revocation and renewal
The Bill will allow for rules stipulating when a local authority must suspend or revoke a licence to ensure passenger safety. In addition, it will ensure that existing drivers must meet the new standards upon licence renewal, restricting “grandfather rights” for sub standard vehicles.
Assuming there are no Parliamentary delays, the Bill is expected to receive Royal Assent and be passed into law in summer 2026. However, this does not mean that that changes will come into force straight away upon enactment. The Bill merely grants the Secretary of State the power to make regulations concerning the matters covered, meaning that secondary legislation will be required which set out the specifics in terms of the exact standards and criteria which will apply. This is the point at which the regulations will converge with the current DFT Consultation, the outcome of which will no doubt heavily influence what form they eventually take.
The DFT consultation is due to close on 1st April 2026. Following on from this, it is probably reasonable to expect the national minimum standards and consolidation of licensing authorities to be rolled out some time late in 2026 or early 2027.
Whilst the closure of the licence shopping loophole - typically exploited within hotspots such as Rossendale and Wolverhampton - will no doubt be welcomed across the board, the new regime will create some potential risks from a credit hire perspective.
There will be an immediate cost impact on replenishment of CHO fleets, which will need to meet the new minimum standards. The response is likely to be uplifted contractual credit hire rates, with a potential clamour for uplifted ABI rates alongside them. In addition, it is likely that claimants who at the time of the accident are driving older vehicles under “grandfather rights”, will be provided far newer and higher specification credit hire vehicles which meet the new requirements, and charged the rate of the latter. In these circumstances it could be argued that there was no choice but to hire a better vehicle to continue working.
That argument is also likely to be extended to the increased cost of permanently replacing written off vehicles, with claims potentially being made for the cost of new compliant vehicles, rather than the pre-accident value of the accident damaged vehicle. This is a far more problematic argument for a claimant to make persuasively, given the non-compliant vehicle would have had to be replaced in any event at the next licencing renewal. However, insurers will also need to be alive to the prospect of an increase in fraudulent claims for written off vehicles which are approaching licence renewal date.
Durations also have the potential to be impacted. Firstly, any argument that a taxi is roadworthy and should continue to be used post-accident will become even more difficult to sustain, even in the cases of the most minor cosmetic damage.
Secondly, given the increased regulatory burden on LTAs and more stringent compliance testing to be applied, there are likely to be increasingly long waits for inspections, or other administrative bottlenecks, which create delays which are on the face of it not within the control of the claimant.
We will continue to monitor the progress of the DFT Consultation and the route of the Bill through Parliament and will provide an update in due course.
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