The new legislation just affects London currently, but local authorities throughout the country are considering using the capital's programme as a blueprint for their own minicab licensing schemes.
Industry experts have predicted the proposals could open up a potential new market of 160,000 to 200,000 vehicles (Fleet News January 11, 2001).
Unlike black cabs, minicabs in the capital are unregulated and the new proposals intend to deal with the issue, following the introduction of The Private Hire Vehicles (London) Act 1998.
Issuing of licences is expected to start later this year after the final stages of consultation have closed on June 20.
The new rules will mean that an application for a licence to operate must be successfully applied for before a minicab can operate in the capital.
Details of the licence will have to be displayed clearly throughout the vehicle, it must comply with the manufacturer's original specifications and detailed records must be kept.
A spokesman for Transport for London's Public Carriage Office said: 'The benefits of licensing private hire vehicles ensure that vehicles have been independently inspected and confirmed as mechanically sound and suitable for use as a private hire vehicle.
'Licensing also provides significant opportunities for the industry in raising standards and changing public perceptions about the general quality of vehicles used for private hire.
'It may also lead to significant improvements in the overall supply of vehicles - improving the age and quality of vehicles in use.'
Compliance costs are expected to be about £6.2 million a year across the industry, including an annual licence fee of £120 per vehicle and two MoT tests per year, costing a total of £78.80.
When the proposals were first unveiled, the Retail Motor Industry Federation warned they could threaten the future of some green transport and courtesy lift services.
The problem has arisen because of the way laws such as the Private Hire Vehicles (London) Act 1998 are interpreted.
It defines a private hire vehicle as a 'vehicle constructed to seat fewer than nine passengers available with a driver to the public for hire and the purpose of carrying passengers other than a licensed taxi or public service vehicle.'
This could apply to a whole range of fleet vehicles, including green transport vehicles offering lifts to staff and courtesy vehicles used by garages to take customers home or to work while their car is in for a service. The RMI is expected to issue its view on the latest stage of consultation within the next few weeks.