TAXPAYERS will foot the bill for an administrative blunder that will see cabbies paid more than £200,000.

Colchester Council has agreed to pay drivers the year-on-year increases in licence fees it charged in error for the last six years.

The figure is likely to be more than £200,000, shared between the borough’s 1,390 licensed drivers. Each is set to receive at least £150.

The council has not advertised its fee increases in respect of Hackney carriage and private hire vehicle licences, and operators’ licences over the last six years.

A spokeswoman said: “The increases in fees charged in respect of Hackney carriage and private hire vehicle licences, and operators licences have not been correctly advertised.

“This was an oversight on the part of the council and we have been working closely with representatives of the Colchester Hackney Carriage Association and the private hire vehicle trade to agree the process by which the refunds due will be repaid.

“Having taken legal advice, we are committed to refunding the increases that have been made since 2006.”

Refunds will issued from next month. The issue was first raised in September 2010 by Christie Wettasinghe, who runs Colchester cab firm Hawaii Five-O.

Mrs Wettasinghe said: “The council has known about this for nearly two years. If it was the other way around, it would have been taking me to court. It is one rule for them and one rule for the rest. “Business these days is a struggle and it doesn’t help the council is taking my money.”

The council was caught out because the Local Government Act 1976 says any fee rise of more than £25 must be advertised in a local paper. The increases were only advertised on the council’s website.

Mrs Wettasinghe made the inquiry after local government watchdog, the Audit Commission , found Guildford Borough Council had unlawfully increased its licence fees.