A spate of insolvencies in the taxi sector may be imminent as the cost of living crisis bites.
As a regulated industry, tariffs aren’t rising fast enough to match the higher costs faced by drivers. In fact, Company Debt’s data suggests that taxi drivers may spend up to £6000 more in 2022 on fuel.
“The taxi industry is experiencing multiple challenges at the moment: COVID recovery, rising fuel costs and also a massive hike in vehicle cost,’ said David Lawrie, director of the National Private Hire & Taxi Association. ‘This is going to get a lot worse.’
Rising Fuel Prices Will Mean Higher Fares
With the average tank of petrol now costing £100, fuel prices are a major component of the cost of living crisis. The EU’s Russian oil embargo, combined with the acceleration of Chinese manufacturing post COVID-19 means prices may well tip £2 per litre during 2022.
While this is affecting everyone, those who drive for a living are seeing an instant reduction in their earnings.
In London, cabbies are choosing to queue at ranks rather than driving in search of customers, reports their union.
‘Fuel is the largest part of your daily running costs,” said Steve McNamara of the Licensed Taxi Drivers Association (LTDA) ‘If your running costs are up 20-25%, it starts to bite.‘
Multiple Challenges for a Sector in Transition
But fuel costs are not the only pressure on cabbies, adds David Lawrie ‘there’s a massive hike in vehicle cost underway as many councils introduce new requirements.’
‘Local authorities are implementing new criteria such as electric vehicles or CCTV, and this is going to have a financial impact on the industry as a whole. In fact, many operators are struggling to get drivers. A lot of private operators do not want to put their prices up to keep their clients, but on the other hand, many drivers are struggling to make a wage. As a result, many go away from driving careers to feed their family.‘
‘Those who have invested £60 000 in a new electric vehicle and find themselves without an income get their vehicle taken back by insurance companies and get black-listed.‘
