Should all goods vehicles be subject to the same operator licensing regulations?

O-licence


It is more than 20 years since the Goods Vehicles (Licensing of Operators) Act 1995 came into force. During that time, subject to certain exemptions, operators of goods vehicles with a gross plated weight in excess of 3.5 tonnes that are being used for hire or reward or in connection with a trade or business have been subject to the regulatory control set out in the 1995 Act.

In 2011 amendments were made to the Act to incorporate the provisions of EU Regulation 1071/2009, establishing common rules on conditions to be complied with for those wishing to pursue the occupation of road transport operator. As part of this, changes were made in 2011 relating to vehicles under 3.5 tonnes towing a small trailer.

The exemption was no longer available for those towing a small trailer and engaged in work for hire or reward. This year the exemptions regarding mobile plant vehicles have been tightened, with an amendment being made to the 1995 Goods Vehicles (Licensing of Operators) Regulations to restrict the exemption for mobile plant to vehicles where the only goods carried by the vehicle are either used for the propulsion of the vehicle or are loose tools or equipment.

Distinctions between licence holders

The 1995 Act makes various distinctions between the regulation of restricted and standard licence holders. At both the initial application stage and during the currency of the licence, there are different requirements for the different types of licence.

One major difference relates to finance. Both applicants for and holders of goods vehicle operator’s licences need a level of financial resources to show financial security, but the levels required differ significantly.

Currently the levels for restricted licences are £3,100 for the first vehicle and £1,700 for each additional vehicle, compared with £7,950 for the first vehicle and £4,400 for each subsequent vehicle for standard licence holders. Part of the discrepancy is because the levels for standard licence holders are set out in the 2011 regulations at €9,000 (£8,000) for the first vehicle and €5,000 for each additional vehicle and are adjusted each year to reflect changes in the exchange rate.

The traffic commissioners (TCs) are currently undertaking a consultation process on whether or not to alter the level of financial resources required for a restricted licence. The levels have not been changed since 2004 when, with the country being in recession, the TCs used their discretion not to impose any additional burden on restricted licence operators.

One option regarding the level of financial resources and on which the TCs are seeking views, is whether or not to standardise the requirement across all types of licences. As the requirements for a standard licence are set out in the EU regulation - at least for the time being - the sum required for a restricted licence would have to be raised to equate to that of the standard licence.

While the TCs are considering whether or not to harmonise the position of restricted and standard licences in relation to financial resources, in Brussels the European Commission has published a proposal for a new regulation to bring LCVs within the scope of operator licensing. In 2016 the EC undertook a public consultation exercise and concluded that the present regulation was only partially effective in ensuring fair competition across the whole of the EU.

The proposal is to amend the existing Regulation 1071/2009 in various areas, including extending its provisions to LCVs. One of the purposes behind the proposal is to ensure a minimum level of professionalism from those operating LCVs.

In 2016 there were 3.8 million vans registered in Great Britain, compared with 493,600 heavy goods vehicles. The EU’s proposal is that the requirement to hold an O-licence be extended to apply to LCVs.

Currently, there is provision in EU Regulation No 1071/2009 for derogation by member states for the provisions of the regulation to apply to vehicles with a maximum laden mass not exceeding 3.5 tonnes. However this derogation allows for different provision across the EU.

The proposed new regulation would remove this derogation and bring consistency throughout the EU. The proposed new regulation will ensure there is a minimum level of professionalism in the LCV sector and by making these operators subject to regulation, improve the fairness between this sector and those currently subject to O-licensing.

The proposals only apply to those who use LCVs for hire and reward. Not all the requirements that currently need to be satisfied by a standard licence-holder would be applicable to the LCV sector.

They would need to satisfy the requirement to show that they had an effective and stable establishment in the country issuing the licence and that they were of appropriate financial standing. However, it is proposed that those operators operating only LCVs would be subject to less vigorous financial requirements, with €1,800 or equivalent needed for the first vehicle and €900 for each subsequent vehicle.

Proposal exclusions

The proposal excludes such operators from the mandatory requirements regarding transport managers, good repute and professional competence, although member states could apply these provisions if they so wished. In addition to the fair competition arguments, there are also road safety benefits from more vehicles being subject to regular inspections and daily defect reporting.

The DfT already publishes a best-practice guide for van operators. The proposals are currently going through the EU legislative process, the final stage of which will be publication in the official journal and then coming into force 20 days after publication.

Given that regulations take direct effect, it is possible that the proposals may be implemented and apply during the EU withdrawal agreement implementation period. If that were the case, or if the UK adopted similar provisions it would, for the first time, bring part of the LCV sector under regulatory control.

. By Christabel Hallas, a solicitor specialising in transport law. She can be contacted on 01756 790631 or christabelhallas.co.uk