Transport: Road: Regulatory: A UK-wide Overview

Introduction

The UK road transport industries, heavy goods vehicles (HGVs) and public service vehicles (PSVs), are both regulated by the Office of the Traffic Commissioner (OTC). There is no anticipated change to the regulatory structure within the next 12 months. The legislation for both sectors is mature, well established, and widely understood by participating businesses.

A new Senior Traffic Commissioner, Mr Kevin Rooney, was appointed in mid-2025, and it is likely that over the next 12 months he will adjust the OTC’s priorities in response to evolving industry risks.

Although the legislative framework is stable, the priorities of the Traffic Commissioners and the Driver and Vehicle Standards Agency (DVSA) change more significantly over the short and medium term. Changes in the regulatory expectation of licence holding businesses have been substantial over the past five years and have caught many operators off guard. Increasing use of technology, and therefore data, to assess operator risk has shifted the focus for management teams, and these areas of focus are likely to continue changing.

Key risks remain poor maintenance regimes and poor management of the drivers’ hours compliance and recordkeeping. Another key consideration, which is often misunderstood by operators of all sizes, is the statutory link between transport managers and the directors of entities operating under a Traffic Commissioner issued Operator’s Licence (“O-licence”). A critical area of challenge is operators whose core business in not the fleet management, and where there can be a consequential lack of awareness among the senior management of the rigour of the O-licence regime.

The changing regulatory expectation has driven a steady increase in the need for training across all levels within transport businesses, from drivers through to senior management and boards. Ensuring that management teams remain fully aware of operational and compliance risks is particularly important for all organisations, including those where transport is not the primary business activity. Specifically, O-licence awareness training and transport manager refresher training is moving from a “nice to have” to an expectation to demonstrate compliance management is fit for 2026.

Whilst there is significant overlap within the sector, there are distinct challenges and opportunities for both goods vehicle and passenger transport operations.

HGV Operations

The goods vehicle industry, generally low-margin and high-turnover, is particularly sensitive to economic fluctuations. National economic forecasts for 2026 point to modest UK GDP growth of 1.2% (HM Treasury, 2025), providing a cautious backdrop for operators. Rising labour costs, wage inflation, and increased employer National Insurance contributions present significant cash-flow pressures. While higher consumer confidence and increased retail spending could benefit haulage operators, the current economic climate suggests that household cost pressures may reduce consumer spending.

The goods vehicle transport sector is particularly diverse in its operations. Examples range from transporting abnormal civil engineering loads, gold bullion, local government waste collection and Formula One race team equipment, to supplying large retail supply chains. While the licensing regime is consistent across these businesses, the operational focus varies substantially. Senior management training is particularly critical where transport is a supporting function rather than the core business, as it ensures awareness and competent management of evolving compliance and operational risks. Where there are serious injury or fatal accidents, this management at director and senior management level will be explored rigorously; the risk of prosecution at this level of management has not been higher where the compliance management systems are found wanting and this is a cause of the fatality or serious injury. In this regard, there is an increasing focus on driver health and wellbeing, which feed into the question of whether a given driver is fit to drive. Much of this focus stems from the Glasgow bin lorry crash and the fatal accident inquiry report that followed that incident.

The HGV sector tends to achieve higher margins where it adds value beyond transport, such as through warehousing or specialised handling of high-value or hazardous goods. Highly specialist operations, such as moving abnormal loads or transporting sensitive materials, typically outperform general haulage in terms of profitability.

PSV Operations

PSVs are divided into coach operations, providing private hire and tour services, and bus and coach operations, delivering scheduled services including school services, express services and commuter routes. The regular local bus market is undergoing significant transformation, driven by increasing local authority control ceded by the previous and current government. Local and combined authorities now have the ability to franchise services, taking control of the entire service provision, and planning and managing the timetables then franchising these out to operators who will not have any competition on those services. Franchising is very challenging for the SME PSV sector. There are many different potential models of franchise structure, and this is a developing area which will see increasing growth in 2026.  

An alternative to franchising is the option for local authorities to manage, with increasing powers, the existing enhanced partnerships. There are many ways this can be done, and the objective is to give authorities powers to design and operate the network that are similar to those of franchising authorities, while retaining the potential for the private sector operators to compete on those networks and to carry the commercial risk of the operation. This model is less challenging for SME operators.

Simultaneously, ongoing pressure to achieve net zero emissions requires substantial capital investment in fleet renewal. Newer vehicles may be electric or hydrogen-powered, both of which necessitate significant supporting infrastructure. Repowering fleets represents a considerable investment for large enterprises and SMEs alike. These factors, combined with increased local authority influence, are likely to encourage some consolidation and collaboration among smaller operators, favouring larger organisations capable of absorbing these costs.

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References

HM Treasury (2025) Forecasts for the UK economy: November 2025. London: HM Treasury. Available at: https://assets.publishing.service.gov.uk/media/691c9ee4e39a085bda43ef2c/Forecomp_November.pdf