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“Fundamental reform” on the horizon for the Traffic Commissioners?

On 17 May 2023 the long-awaited Traffic Commissioner Function Review 2021/22 was finally published.

Find the Traffic Commissioner Function Review here.

Admittedly, at first blush the snappily titled Review may appear to be of only niche interest. The reality, however, is that any company that operates either goods vehicles or buses should take note of its recommendations. If taken up (which seems likely) they will amount to the single greatest change to the transport regulatory regime this century.

A quick recap

Back in August 2021, the Department for Transport launched a consultation on the future of the Traffic Commissioner function. The wider industry and trade bodies were asked for their views on the effectiveness and suitability of the existing system. All options were on the table, including the question of whether the functions provided by the Traffic Commissioner were even required.

Almost two years later the Review has finally landed. In total it stretches to 76 pages and includes 13 key recommendations. Many of these are of a back-office nature. A number, however, are extremely significant and, if implemented, will represent a fundamental reform to the licensing regime effecting all operator licence holders.

Yes, the functions of the Traffic Commissioner are still very much required

In this, the Review is unequivocal. It found that there was “compelling evidence that the functions carried out by TCs are still required”.

This should come as no surprise. The Review itself points out that in 2020, 176 billion tonne-kilometres of domestic freight was moved within the UK, of which 77% was by road, and that in 2019/20, there were 4.5 billion journeys on local bus services. Against this backdrop “there is clearly a significant public interest in ensuring the industries are well-regulated, and a need for DfT to ensure that there are effective regimes of licensing and compliance for those who operate vehicles.”

It also recognised that “If there are to be licenses issued, there must naturally be a process for challenge when the conditions on which they were given are breached. It was recognised overwhelmingly that something akin to the TC’s current tribunal functions is necessary to achieving this.”

This is hard to argue with. One only needs to compare UK road safety statistics with those of other countries with less robustly regulated transport industries for the benefits of our current system to become clear.

This does not mean, however, that it is to be business as usual. Whilst accepting the need for a transport regulator, the Review goes on to recommend a number of fundamental reforms to the current system:

Individual Traffic Commissioners to be replaced by a single Tribunal

Whilst going to great lengths to praise the work and function of the individual Traffic Commissioners, there is a clear recognition in the Review that the current model as it stands is outdated and in need of reform:

“The TC function has gradually evolved over time, without necessarily aligning to a longer term strategic vision of a clear policy delivery framework. As such, its organisational structure and governance and sponsorship arrangements are relatively unique with no exact equivalent across government, representing a significant divergence from centrally produced guidance and recognised best practice.”

The solution it says, is to create a single specialist tribunal: “the TCs should be consolidated into one independent tribunal body rather than sit as eight individual tribunals” to be led by a Tribunal President rather than a Senior Traffic Commissioner.

The practical effect of this would be to give the Traffic Commissioners far greater powers over how their Public Inquiries and regulatory proceedings would be run. There would be the introduction of tribunal rules and the power to make costs orders against frivolous applicants and those operators who fail to comply with the directions of the Tribunal.

Such changes would bring the Traffic Commissioner function much more closely into line with other equivalent licensing tribunals. It also raises the prospect of the new Tribunal having greater “teeth” to take action against operators who fall short of the high standards expected.

There is no doubt that the current system of individual Traffic Commissioners sitting as separate tribunals is largely unique in the UK regulatory landscape. Few other regulators in 2023 are tasked with holding over 1000 Public Inquiries a year and 10 times that many driver conduct hearings, all without the benefit of a centralised tribunal, tribunal rules and the ability to make costs orders.

Larger fees for larger operators

On the question of fees, the Review does not pull its punches: “fundamentally the current fee structure is flawed”.

The fixed fee per licence model comes in for particular criticism. Under the present system an operator spends £257 to apply for a licence, £401 at the point of issue, and a further £401 once every 5 years to continue the licence. This is the same fee whether an operator runs one vehicle or 1000 vehicles:

“While these fees may not be insignificant for a sole trader or small company, particularly in the current economic climate, for a business of any scale they are negligible compared to the costs of operating vehicles. The fees are variously compared to half a tank of diesel for an HGV or the cost of one tyre.”

Aside from natural arguments over fairness, there is a more pressing need to consider a reform to the current fee structure: in 2020/21 the licensing service income was just over £13 million, whereas expenditure over the same period was almost £18 million. The proposal is that this deficit is paid for by the industry, including through the introduction of graduated fees.

Whilst it would take changes to primary legislation to implement these fee reforms, it is not hard to see how the Department for Transport might decide to take this forward as a priority, if for no other reason than to balance the books. If so, this would certainly mean increased costs coming down the line for larger fleet operators. Depending on the level of any future fees, this may be a price the industry is happy to pay to bring application times down and to secure an even better service from its regulator. 

The current deficit is not a result of waste however, with the Review finding that “the TC function is relatively lean, operating at (and in some cases beyond) capacity and, as evidenced through the consultation, represents good value for money to consumers.”

What’s in a name? The end of “the Traffic Commissioners”

It has been pointed out more than once that the Traffic Commissioners are not really “commissioners” and don’t have anything to do with “traffic”. This is not lost on the authors of the Review: “the current name seems unhelpful in increasing understanding of their role and a missed opportunity to further demonstrate their judicial independence.”

This last point is a significant one. The Traffic Commissioners fulfil a judicial role and are independent of DVSA. Nevertheless, their Office is almost entirely staffed and funded by the DVSA, who are themselves the enforcement arm of the Department for Transport. The Review acknowledges that this has led many to question the perceived independence of this relationship. If taken forward the new Tribunal structure will go a long way towards allaying these concerns.

A new blueprint for the future or just more of the same?

This is not the first Review to recommend reform to the Traffic Commissioner function. Previous recommendations have either not been taken up or have been watered down so much that they have amounted to no more than tinkering around the edges. With the need for primary legislation change, a general election on the horizon and limited parliamentary time available, it remains to be seen how many of the recommendations will become reality.

If there is to be prioritisation, it seems likely that the DfT will want to focus on licence fee reform, as this may be seen as the magic bullet that would address many of the other problem areas with the current system and result in a cost-neutral regulatory regime funded in an equitable way by the industry that it supports.

We will continue to follow developments closely on behalf of our clients.

For advice on preparing for a Traffic Commissioner function reform, contact our team of expert transport regulation lawyers.

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