Fare Increase

[The Dark Knight]

Dear all,

As you'll be aware the licensing unit source the data for the hackney carriage annual fare review on 1 December each year . This year we have been advised by the organisation that provides the insurance data that they are no longer willing to provide an insurance quote based on the current insurance criteria used in the Manchester Halcrow formula.

The current insurance criteria is as follows

"Quote based upon one owner without “no claims” discount, employing one driver and having a claim resulting in the loss of £500 excess"

The insurance company have suggested that a revised criteria be used namely the average insurance quote given for Manchester hackney proprietors.

Any amendment to the insurance criteria used in the formula means that any % change between the previous year and the current year is not comparing like with like . We have consulted Halcrow and asked for their opinion as to how this situation could be resolved .

Halcrow have suggested that for the purposes of this years fare increase we look to take the average insurance quote for Manchester hackney proprietors as at Dec 1 2010 and compare that to the average Manchester hackney proprietor quote as at 1 Dec 2011. The % difference between these two figures would then be used in this years formula. This would be fed retrospectively into the 2010 formula and compared to the 2011 data .

This would give an overall % difference between the 2 years which would then represent the annual fare % increase

I have attached a copy of last years report on the annual fare increase, Para 3.3 , Table 2 sets out how the calculations are derived

(See attached file: Annual_Hackney_Carriage_Fare_Report.pdf)

Could you please let me know if you have any objection to this proposal and if so what you consider to be a suitable alternative,

It would be helpful if you could copy in all parties on your response so that everyone is aware of any suggestions that are being put forward and can comment on the relative merits of each suggestion

In order to meet the committee timetable the report needs to be in draft format prior to the start of the Christmas holidays, I therefore ask that any suggestions regarding the insurance calculations or any other request regarding this years fare review be forwarded to us by Wednesday 14 December.

MR

[The Dark Knight]

All

As you are aware the annual fare increase is calculated using the Halcrow/Manchester formula. The formula is based on a number of basic assumptions from which have been produced a set of component costs. The component costs relate to vehicles, fuel, parts, garage and servicing labour, fuel, insurance, miscellaneous (fees) and average national earnings. Every year the figures are fed into the formula, at the same date (or earliest date the next years figures are available) , using the same data source which provides for a like for like comparison.

There are two issues that need to be addressed in relation to the sourcing of future figures:

Insurance : - The current component cost criteria is to obtain a quote for One owner (no NCD) employing one driver and having 1 claim resulting in loss of £400 excess. The Westminster Insurance Company advised that they would not give a quote in relation to the above and considered that the real way to measure premiums in the area is to establish the average cost of a Hire and Reward policy premiums for that licensing authority [Manchester].

Halcrow were contacted in relation to this issue and agreed that this would be a better way to source that data. They further advised that the figures for the average cost of insurance for Manchester should be added into the formula for 2010 and 2011.

Proposal - In order to address this issue the figure for the average cost of insurance for Manchester should be added to the formula for 2010 against the average cost of insurance for Manchester 2011, which produces a 32.61% increase. (we cannot assess the 2011 average figure against last years criteria quote)

Average National Earnings:- In previous years the ‘mean’ figure for the Average National Earnings has been used. However last year the ‘median’ figure was used in error.

ASHE who produce the data advise the use of the ‘mean’ figure “The headline statistics for ASHE are based on the median rather than the mean. The median is the value below which 50 per cent of employees fall. It is ONS's preferred measure of average earnings as it is less affected by a relatively small number of very high earners and the skewed distribution of earnings. It therefore gives a better indication of typical pay than the mean.

ASHE do not now provide an annual 'mean' figure'

As the ‘mean’ figure for 2009 was compared with the ‘median’ figure for 2010, a reduction of -2.15% was included in the formula.

Proposal - It order to address this the median figure for 2009 should be used as the 2010 figure against the 2011

figure – this gives a % increase of 4.38%, which balances out the -% of last year. The Annual National Earnings ‘median’ figure will be used in the future.


If you have any comments in relation to the above please e-mail Jenette or myself, no later than 16 December 2011.

Ann Marku
Licensing

[The Dark Knight]

Hi Everyone,

If I thought we could get enough support I would appeal this fare increase, but you will sit back like always and not do anything, you are pricing yourself out of the market.

You think your quiet now, wait for this increase and it will get worse, hey don't forget the owners and multi owners they love a rent rise !!!!

[The Dark Knight]

Dear all


The agenda and reports for the above meeting are now available on the Councils website .

I can confirm that the agenda includes a further report on the hackney carriage fare review and a part "b" item ie held in private in relation to a quarterly report regarding taxi and street trading decisions made under delegated authority


Regards

Jenette Hicks
Licensing Unit Manager