The trade press for private hire industry currently has a due diligence concern. Their particular focus is Wolverhampton Council. Apparently, they issued some 12,000 private hire licences in 2018. That is a lot – for any council. According to a freedom-of-information request however, only 852 licences were actually for Wolverhampton drivers!

Performing due diligence is more than just kicking the tyres.
Licensing and insurance is a serious issue when carrying out due diligence

The Legal Aspect

Over 11,000 licences were granted to drivers in Birmingham, Nottingham, Derby, Shrewsbury, Stockport, Manchester and the East Midlands. It is a concern because – The Local Government (Miscellaneous Provisions) Act 1976 – states (under section 46) all three licences (operator, vehicle and driver) must be held in the same borough.

Maybe taxi companies have their operator licences in Wolverhampton too? It may save money for them but, it is a worry for public safety. In general, licensing officers can only deal with licensees in their local county. A Licensing Officer’s jurisdiction is limited, unless they can be deputised by other councils. It can also mean less stringent vehicle checks are complete.

Buyer Beware

For a business seeking private hire suppliers, licensing can be a minefield. It is especially true for due diligence. Personally, if I was responsible for finding a new provider, I would check something basic: I would request a copy of the operator’s licence (and the number of vehicles they can run).

It is a simple but effective step. If an operator uses vehicles which their licence does not cover, there is no insurance! To be legal, the operator, vehicle and driver MUST all be licensed by the SAME authority. An operator can however, pass a job to another operator outside their area. But only if they too have all three licences in place – this is the ‘triple lock’.

A secondary check for potential suppliers is to contact their local authority (or council). Sometimes a search on their website is sufficient but if not, make a phone call. Ask for the licensing department and request to verify the operator’s licence (as current and legitimate). From here you have a great starting point. The first stage of a due diligence process is complete.