With effect from 1 January 2017, goods and passenger operators face a colossal 18% increase in the amount of readily available financial resources required to support their Operator’s Licences.
Standard National and Standard International licence holders have a constant statutory requirement to have readily accessible funds to support their Operator’s Licence. This is re-valued at the start of October every year by reference to the exchange rate between the Euro and the pound. The Euro requirement is €9,000 for the first vehicle and €5,000 for each additional vehicle.
After the EU Referendum on 23 June 2016, the pound plummeted in value against the Euro meaning that at the start of October 2016 it was worth about 18% less than on 1 October 2015.
The consequence of this is that from 1 January 2016 the new amounts required will be as follows:
First vehicle: £7,850 (increased from £6,650)
Additional vehicles: £4,350 (increased from £3,700)
There is no change for Restricted Operator’s Licence holders whose rates remain at £3,100 for the first vehicle and £1,700 for subsequent vehicles. This has remained unchanged for years.
The impact of this huge increase in the financial standing rates will be varied. For some Operators it may be profound: for example, the increase in the financial standing required for a 10-, 15- and 20-vehicle operator will be £7,050, £12,300 and £14,200 respectively in additional funding. This could bite some Operators hard.
It will not be possible for an Operator to argue that it has insufficient means as the financial standing requirement is a mandatory one. If the Standard National or International licence holder is unable to meet the financial standing requirements then this constitutes a material change that must be notified to the Traffic Commissioner although it is undoubtedly the case that many operators do not do this. It may be necessary to reduce the size of the licence. The financial requirement is for the size of the licence granted and not for the vehicles that the operator may happen to have specified on it at any given time.
The legislation permits a Traffic Commissioner to grant an Operator a ‘period of grace’ within which to be able to reprove the financial standing requirement is met. However, this has to be done by writing to the Traffic Commissioner.