Why are so many taxi and private hire drivers struggling to get financial aid?

The passenger transport sector has been one of the hardest-hit out of the entire economy. With people travelling less, there is a much smaller requirement for transport services.  

Whilst many transport providers can utilise the furlough scheme, the taxi and private hire trade is predominately made up of self-employed individuals. 83% of drivers in the industry are classed as self-employed and many have struggled to access financial support.  

The sections below outline some of the more common issues drivers are facing.  

Grants for businesses do not apply to drivers

Whilst self-employed drivers do have access to the Self Employment Income Support Scheme (SEISS), this doesn’t give them a comprehensive package of support. The SEISS payments offer up to 80% of a driver’s projected income, but this does not consider vehicle insurance, loans, added costs of PPE and cleaning equipment.  

Business across the UK have been able to apply for a variety of grants to help them with business costs, such as rates, insurance etc. As most self-employed drivers work from home, they aren’t eligible for these grants, despite experiencing similar financial hardships as those running a bricks-and-mortar business.  

Some councils have tried to mitigate this by allocating financial grants for self-employed drivers out of additional funding granted to local authorities.  

Some councils have not issued support payments

Councils across the nation have been issued with extra funding to help support the economy in their area. 2021 will see a record £51.2 billion in allocated funding, with £1.55 billion of ‘unringfenced funding’ to be issued where needed, at the council's discretion.  

Many local authorities identified taxi and private hire drivers as being prime candidates for this kind of support. Ranging from a couple of hundred to a couple of thousand pounds, they can make all the difference to someone’s financial circumstances during these trying times.  

Some licensing authorities, such as Bolton Council, have not implemented a financial support package for their drivers. This isn’t a problem for drivers that work as employees, as they can still benefit from the furlough scheme. But, for self-employed drivers, this is a big problem.  

With the closure of the night-time economy and the cancellation of large social events, most drivers have seen their income diminish more than ever before. Unions and driver representatives are appealing to these councils to recognise the position that drivers find themselves in and to draw up a suitable support scheme to aid the industry.  

Councils have issued payments, but drivers are ineligible  

Prior to the pandemic, a hotbed of contention was the fact that some licensing authorities issued licenses to drivers from outside of their local area. While this can cause problems for the enforcement of a licensing regime, in this instance, it is affecting drivers’ ability to access financial support.  

The grants being offered to drivers by licensing authorities are only available to drivers who live and drive within the area covered by a specific authority. Drivers who are licensed by one council but live in another area are therefore unable to apply for financial support.  

Wolverhampton City Council has been the target of several complaints because of this. Sources believe that as many as 80% of the licensees from Wolverhampton City Council live in other areas of the country. According to the BBC, the council would be liable for a bill of around £36 million, if all the licensed drivers were eligible to apply for their £2,000 grant.  

What can you do?  

If you’re a driver suffering financial hardship the first thing you should do is check to see if there are any grants or support available from your local licensing authority. You will also be eligible for the SEISS grants if you can evidence a submitted tax return for the 2019/20 fiscal year.  

Trade representatives across the country are petitioning for a reassessment of the eligibility criteria for business grants. This is a developing situation and seems likely to change for the better, thanks to the pressure from trade groups on the government.  

Make sure you follow us on social media to keep up to date with all the news from the trade. For more information about how TaxiPlus’ licensing solutions can help you, drop us an email at hello@taxiplus.co.uk