Glasgow's black market in taxi licences

Interesting article in a recent edition of the News of the World. Entitled '£26 million black cab black market - taxi tycoons raking in millions through crafty licence loophole', it's about Glasgow taxi licences changing hands for up to £60,000 each, contrary to the licensing legal regime. Taxi licences in Glasgow were limited in number almost two decades ago at 1,428, thus collectively they're worth in excess of £50 million. That's the price to buy a licence outright, but their rental value (excluding the vehicle) is probably in excess of £100 per week, thus in total perhaps £10 million per year.

In view of the recent questions raised over scrutiny and accountability at Glasgow City Council in the wake of the Stephen Purcell affair, this latest revelation just adds grist to the mill. However, it's interesting to compare the political reaction. Tory MSP Bill Aitken said: "This has been going on for many years, though the sums now are a lot more substantial."

Which is particularly interesting in view of the fact that Mr Aitken is a former district council licensing chairman.

Labour's Holyrood justice spokesman Richard Baker said, "There needs to be an urgent investigation into what is going on," while for the SNP Sandra White MSP said:

This is a very disturbing problem that the News of the World has brought to light. The council should have an investigation to find out exactly what is going on, find out what checks and balances there are over this issue and renewal of licence plates and put an end to this black market trade.

Of course, in view of the post-Purcell fallout - not to mention the fact that Glasgow City Council is Labour controlled and its licensing convener is a Labour councillor - Sandra White may be making a political point here, but it should be underlined that the licensing regime in Edinburgh is effectively identical, and the chairman there is the SNP's Colin Keir, and there seems little doubt that, like former councillor/bailie Aitken, he's more than aware of the trade in licences.

Indeed, it seems that the News of the World will be featuring the issue again this weekend, this time focusing on Edinburgh.

The NotW's recent piece isn't online and is thus included below:


£26M BLACK CAB BLACK MARKET

Taxi tycoons raking in millions through crafty licence loophole

A black market in cab licences worth at least £26MILLION each year is today exposed by the News of the World.

Wily taxi plate owners exploit a lucrative loophole to rake in a fortune through the cunning scheme. The licences should cost £166 but because numbers are strictly limited by local authorities, the permits are changing hands on the streets for between £40,000 and £60,000.

And in Glasgow alone, the backdoor industry makes up to half a million pounds every WEEK. One insider said last night; “The taxi trade involves big money – this is a licence to print the stuff.”

Council chiefs in Glasgow restricted the number of black cab licences to 1,428 in the early 1990’s. That figure remains the same today. Yet of those, only THREE permits are held by named individuals. The other 1,425 are owned by small businesses who used them to generate huge sums.

Though it’s against regulations to trade the taxi plates, operators have found a way to bend the rules by setting up registered companies. When they want to sell the plates they simply inform the council that another director has joined the firm. That person can now legitimately use the licence. The back door system means no new licences are ever available – despite a massive waiting list of hopefuls across the city.

One typical example of the businessmen who are making the plates pay is Glasgow-based entrepreneur John Cowe, who rakes in up to £1.5million a year from more than 100 black cab permits. Mr Cowe – who runs London Taxis Direct – rents them or sells them in instalments to drivers who pay him £350 a week.

Posing as a would-be taxi driver, our investigator visited his office in Glasgow’s east end and was offered a deal for £53,000. He was told: “A plate is about 40,000 to buy in, plus a motor. You’re talking about a £50,000 to £55,000 package to buy in.” The taxi boss – who lives in a £1.5million home in Bothwell, Lanarkshire, with wife Margaret – offers two finance packages to fund the cab deal. And the fact that he drives a Range Rover Overfinch and Bentley, worth aroung £200,000, suggests business is booming.

Judging by taxi office notice boards across Glasgow, other cab licence owners are openly selling their permits for between £40,000 and £60,000. Our source revealed: “The council cannot say that the person licensed to display the plate is the same person who is driving or operating the cab. They can barely verify that the person named as the plate licensee hasn’t sold it on. The police regularly come up against this problem when tracing witnesses to crimes. In some ways the private hire system is more transparent – when you call them they know where you are, where you are going and who they have sent to collect you.”

More than 70 per cent of councils in England and Wales have scrapped the restricted licences scheme in a bid to make the system less vulnerable to abuse. Critics insist the artificial limit on cab numbers in Glasgow has helped fuel the black market trade in gold dust plates. Our insider added: “It costs a lot of money to run a cab, but there is a profit margin there whether it is all done above board or with corners being cut.

Justice Secretary Kenny MacAskill last year praised black cabs as a safer alternative to the private hire taxi network, which has been rocked by a number of revelations about its links to the underworld. He pledged to crack down on rogue minicab firms and evidence of that was seen last month as councils rejected a string of applications for taxi base licences.

In the case of Glasgow-based Network Private Hire, which had a £2million NHS contract, cops had alleged close ties to the notorious McGovern crime clan. There is no suggestion the black cab industry has any connection with organised crime, but last night politicians called for an immediate probe into its licensing.

Labour’s justice spokesman Richard Baker MSP said: “There needs to be an urgent investigation into what is going on.”

And Glasgow Nats SP Sandra White said, “This is a very disturbing problem that the News of the World has brought to light. We’ve just had a crackdown on private hire taxis and now there needs to be much greater scrutiny of the hackney cab business. The council should have an investigation to find out exactly what is going on, find out what checks and balances there are over this issue and renewal of licence plates and put an end to this black market trade.”

Tory justice spokesman Bill Aitken – a former district council licensing committee chairman – added: “This has been going on for many years, though the sums now are a lot more substantial.”

However, last night John Cowe DENIED he was selling taxi plates. “I am not selling the plates. It is the goodwill of our business, the company name, the same as others are doing in Edinburgh, Liverpool, London and other cities. There’s nothing illegal about it.” When reminded of his offer to our investigator, he replied: “I never mentioned any sums of money.”

He added: “The licences are granted at the discretion of Glasgow City Council. I can’t sell something that doesn’t belong to me. I’m selling the goodwill of our business, on the condition that the person is a good and proper person and the city council will transfer the licence to them. If they are not good and proper people the licence won’t be transferred. There is no monetary value on the licence, they are granted by the council. There are several other people in Glasgow who do what I do, not just myself.”

A council spokesman added: “Taxi licences are granted or refused against a legislative regime set out by national government. Licensing committees rule on applications following consultations with police and can also hear police evidence relating to alleged beaches of licences – however, they do not themselves investigate individual cases. If the News of the World is able to provide police with evidence of licenses being abused, our committee would obviously welcome the opportunity to examine it.”