R v London Transport Executive, ex p GLC [1983] QB 484

Key point

A policy that fails to take into account relevant considerations and takes into account irrelevant considerations can be lawfully substituted by a similar policy provided right considerations are taken into account

Facts

After the Greater London Council (GLC)’s ‘Fares Fair’ scheme to reduce transport costs was quashed in Bromley LBC v Greater London Council [1983] 1 AC 768 the GLC proposed a new ‘Balanced Plan’ scheme under its duty under s1 Transport (London) Act 1969 to ‘promote the provision of integrated, efficient and economic transport facilities and services for Greater London’
The GLC issued a direction to the London Transport Executive (LTE) to reduce fares by an average of 25%, and proposed to make up the consequent 17% deficit in revenue by making a grant under s3
LTE objected, on the ground that the direction failed to have regard to LTE’s duty under s7(3) Transport (London) Act 1969 to try to break even
GLC applied for judicial review by way of declarations that the direction issued to LTE was lawful and its implementation within the powers of LTE

Issue

To what extent the discretionary powers of GLC and LTE may be fettered, having regard to the correct interpretation of the Act of 1969 in light of Bromley LBC v Greater London Council [1983] 1 AC 768?

Held (Divisional Court)

Declaration was granted that the direction was lawful
The GLC had considered its duty to the ratepayers and the statutory duties imposed by the Act of 1969 on it and LTE

Kerr LJ

‘The ratio of the decision of the House of Lords in the Bromley case can be summarised as follows. Although the G.L.C. has power under the Act to make grants in aid of past and prospective revenue deficits in order to permit the L.T.E. to discharge its duty to break even so far as practicable in consecutive accounting periods, it was beyond the powers of the G.L.C. to do so in aid of a policy of generalised low fares which was not intended to further any statutory purpose, and which ignored the L.T.E.’s duty to operate on business lines and the G.L.C.’s own fiduciary duty to the general body of ratepayers. In this connection it was also clearly impermissible simply to follow the election manifesto. On the other hand, the case did not decide whether or not a statutory policy under section 1 of the Act, and the promulgation of a plan for such policy under section 2 , could justify the acceptance of losses or increased losses; nor did the case decide what is meant by “so far as practicable” in section 7 (3).‘
‘Finally, although this was not decided expressly, there are strong indications in the speeches in the House of Lords that if the promotion of an “integrated, efficient and economic” (cost-effective) transport system under section 1 inevitably involves increased losses, then such promotion would nevertheless be a lawful exercise of the G.L.C.’s powers, provided that this is not done without proper regard to the fact that sections 5 (1) and 7 (6) are subordinated to section 7 (3).’

Glidwell J

Bromley LBC v Greater London Council [1983] 1 AC 768 ‘is not an authority for the proposition that the G.L.C. may never make a grant to the L.T.E. out of the rates which will have the effect of enabling the bus or underground train fares to be reduced. What it does establish is that the G.L.C.’s power to make such grants may only be exercised within strict limits, and the method by which and the purposes for which the “Fares Fair” scheme was introduced fell outside these limits.’: p. 510