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High interest rates hit taxi drivers trying to Go Green

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Taxi drivers who want to make the switch to electric vehicles are being hit by soaring interest rates as inflation continues to bite.

The UK taxi fleet will play a big part in cutting toxic vehicle emissions and many have already made the switch, with nearly half of London’s 15,000-strong black cab fleet now including EVs and dynamos.

But the switch doesn’t come cheaply, with prices for the LEVC TX starting at £56,000. And, with few people able to fork out that sum in one go, high interest rates on finance deals are forcing cabbies to pay more each month.

Taxi drivers also find themselves in a situation that it is not themselves that choose when to replace their cabs – strict licensing laws dictate the age at which taxis must be replaced, whatever condition they are in.

And the iconic black London taxi is more expensive because it is purpose built for the trade – and also requires specific public hire insurance.

As reported by Taxi Point, this is the position Licensed Taxi Drivers’ Association (LTDA) Senior Rep Sam Houston is now facing.

Sam told LTDA’s Taxi Newspaper that his current taxi has reached its age limit, and he must now find a new black cab to continue working.

But he said rapidly rising interest rates have seen the cost of financing new vehicles skyrocket and almost-unaffordable finance packages mean many cabbies are seriously considering walking away from the job they love.

He said: “In addition to the loss of three years’ working life of my current cab, this time next year I will be required to invest in a new one. Whether I choose to rent or buy, my next cab will certainly cost me a lot more, both in nominal and real terms, than my TX4.

“As I write, the Bank of England has just increased the base rate of interest by 75 basis points to 3%. As I’ve discussed before here, this is not a historically high level, but in the recent context, these rises are eye-watering. Whether you have a mortgage or not, credit is becoming more expensive, and there are not many drivers (or garages) that I know, who can afford to buy new cabs without finance.

“It is reasonable to expect that the cost of finance will increase and stay higher in the medium term. So, I’ll say it again – taxi drivers are investing hugely in the future of London, and we deserve those investments to be recognised and supported, by those who decide where we can and cannot go in the course of carrying out our job.”

Taxi drivers are dedicated professionals to take great pride in their job and their cabs. They play a vital role in communities and drivers in the capital’s black cab fleet play a unique part in keeping the city moving.

While everyone is facing a cost-of-living crisis, there will come a point where many taxi drivers come to the conclusion that they can no longer afford to operate their cabs. Action needs to be taken to ensure this vital service is not taken off our roads.

All information is correct at time of publication. Information provided within this article may have changed over time. No responsibility for its accuracy or correctness is assumed by John Patons Insurance Services or any of its employees.