FRIDAY night and Manchester's Albert Square is swarming with revellers. Gangs of girls wearing lethal-looking miniskirts link arms as they totter about on high heels, dripping with gold jewellery, reeking of sweat and hairspray. Handbags in one hand, cans of special brew in the other, they weave their way towards the cab ranks to go home after a night out on the town.

Outside the night-clubs and pubs, black cabs stand idle while private-hire saloons come and go, scooping up the party-goers to whisk them back to the suburbs before returning to clear more from Manchester's streets. Office parties mean that the two weeks before Christmas are peak time for the taxi industry.

This may be the season of goodwill but there are fears that a taxi war may be imminent in Manchester and Liverpool.

'Some of these taxis carry no insurance. They are taking away my livelihood,' says Bert Jones, of the Manchester Hackney Co-operative, which represents 400 of the city's black-cab drivers.

The number of private-hire firms has increased dramatically in the recession. Their fares are lower than those charged by black cabs, but they cannot be flagged down in the street. To comply with their terms of licence, private-hire cars have to be pre-booked. This booking is a requirement to validate their type of insurance, which is cheaper than that for black cabs. Anybody who hails a private- hire car in the street would not be insured and the driver would be breaching the terms of his licence, acting as a 'pirate'.

In addition, there are 'moonlighters' who simply have a four-door car and tout for fares at popular venues. They have no insurance or licence to carry fee-paying passengers and are equally despised by black-cab and private-hire drivers.

To stop the pirates and the moonlighters, Mr Jones has organised 'entrapment teams' made up of members of the co-operative who pose as ordinary customers in order to catch illegal operators red-handed. One of them is Vic Worrall. By day, he drives a black cab. By night he becomes an agent provocateur, lurking outside Manchester's nightspots in order to catch unwary pirates.

'I usually go out with my wife, so we look like any ordinary couple,' he says. 'We ask suspected drivers if they are for hire but we don't try and entice them with lucrative fares.

'If they say they are booked and not for hire, we go away. But usually they say yes, we get into the vehicle and drive off. A support car with a police officer inside follows behind for a short distance and then stops the pirate driver with the help of one of our members from the Hackney Co-operative.

'Sometimes the pirate becomes abusive when you stop him. I have no sympathy for them, but I do feel sorry for some of those we catch. One of them was an elderly gentleman who had no money for his electricity meter and didn't want to have a bath in the dark. So he sat outside a pub in his car and was waiting for a pounds 2 fare, but he took us instead. That was hard.' Yet Mr Worrall is described by his wife as 'a bit of a softie'. Chosen because he keeps his cool in an argument and is not easily flustered, Mr Worrall says he leads his double life in order to guard the public from the illegal operators.

So far, the Manchester Hackney Co- operative has brought 148 successful private prosecutions against unauthorised drivers. Some are ordinary individuals who wanted to earn extra money. Most of them, however, are legitimate private- hire drivers who broke the conditions of their licence by accepting fares directly from the public, instead of being pre- booked over the telephone.

Manchester Hackney Co-operative now plans to step up its actions by requesting members to give them pounds 25 to finance more prosecutions. If this goes ahead, representatives of the private-hire industry predict violence will follow. 'Many private-hire drivers feel we are too passive,' says Tony McCardell, chairman of the Manchester Private Hire Association, which represents 4,500 private- hire drivers. 'I would be the first to condemn the drivers who operate illegally, but it is ridiculous to pick on private-hire drivers who have a legitimate booking. This is happening repeatedly.

'If the Hackney Co-Operative use these extra funds to increase what they are doing to private-hire drivers, it's going to become more difficult to restrain some of our members from fighting fire with fire,' he says.

'It worries me that an open war could break out and that's the last thing we want. I mean, I'm just trying to earn a living,' he says. 'Black cabs see us as undercutting their prices.'

Mr McCardell says two of his private- hire drivers have already been threatened with violence in the city centre if they did not leave areas outside popular nightspots. They were, he says, simply parked in a busy and, for black-cab drivers, lucrative spot.

Others, such as Stephen Wren, claim private-hire drivers are being victimised. Mr Wren drove a private-hire car for 14 years until he was prosecuted by the Hackney Co-Operative for illegally plying for trade. Despite being acquitted of all charges, Mr Wren claims he was subsequently forced off the road by members of the co-operative.

'After the court case, every time I parked my car I found bricks on the bonnet and lumps missing from the wings of the car. I had to sell it for scrap when it was stolen and driven into a wall,' he says.

'I've been recognised in the street and threatened by Hackney carriage drivers saying, 'Oi] You're going to get your legs broken, boy]' '

Since he sold his car, Mr Wren has worked as a radio control operator on much lower earnings than he earned as a driver. He claims the actions of Manchester's Hackney Co-operative have done more to jeopardise public safety than to protect the public from harm.

'Half the lads go home now at half past one in the morning and won't go into the city centre because they are worried about being set up,' he says. 'There are now more pirates about, taking our place and offering lifts to anyone who asks. If women get into a pirate vehicle, they have no idea who is driving them home. Anything could happen.'

Members of Manchester's Hackney Co-operative reject these allegations and deny that any members are vigilantes who operate beyond the law.

The Liverpool Taxi Drivers Association also operates entrapment teams and wants the local authority to sweep pirates from the streets. Its 740 members represent about a quarter of Liverpool's taxi drivers.

'There will be a bloodbath,' predicts Joe Cawsey, chairman of Liverpool Taxi Drivers Association. 'My biggest fear is that the anger felt by Hackney carriage drivers will overspill and some poor driver will get maimed to the extent where he could possibly lose his life,' he says.

Mr Cawsey calculates Liverpool's black cabs lost pounds 1.5m in business to pirate operators last year. Surveys carried out by taxi drivers suggest their incomes have fallen by more than a quarter.

'Manufacturing industry has diminished and has left a lot of people of middle age on the scrapheap,' says Mr Cawsey. 'People will do whatever they can to survive and one way is to go on private hire. This has meant everyone has got a smaller slice of the cake available.'

Like Glasgow's ice-cream wars and the hot-dog wars in Leicester, lucrative vested interests are clearly at stake in the cab trade. 'Some cab drivers think they've got a franchise on the city's taxi trade,' says Mike Ankers, in charge of licensing at Manchester City Council. 'But it doesn't work like that. Market forces govern the trade and the city council is not obliged to protect anybody's livelihood.

'We have heard of vehicles being burnt out but we have received no formal complaints about violence. Intimidation takes place at some taxi ranks but when we interview people, they don't tell us who is responsible and no one will admit to being a witness.

'We would rather see people properly licensed than be prosecuted for being pirate drivers. We want to see a well-run, properly regulated and legal taxi service.'

(Photograph omitted)