Transport Act 1962

Described as the "most momentous piece of legislation in the field of railway law to have been enacted since the Railway and Canal Traffic Act 1854" [ cite journal|title=Transport Act, 1962|journal=Modern Law Review|date=March 1963|first=Otto|last=Kahn-Freund|coauthors=|volume=26|issue=|pages=174|id= |url=http://links.jstor.org/sici?sici=0026-7961(196303)26%3A2%3C174%3ATA1%3E2.0.CO%3B2-8|format=|accessdate=2007-09-21 ] , the Transport Act 1962 was passed by Harold Macmillan's Conservative government to dissolve the British Transport Commission (BTC), which had been established by Clement Attlee's Labour government in 1947 to oversee railways, canals and road freight transport. The Act established the British Railways Board, which took over the BTC's railway responsibilities from 1 January 1963 until the passing of the Railways Act 1993.

The Act put in place measures which were to enable the closure of around 1/3 of British railways the following year as a result of the Beeching report, as the Act simplified the process of closing railways removing the need for pros and cons of each case to be heard in detail.

Historical Context

By the end of 1960, British Railways had accumulated a deficit of some £500 million and the annual rate of deficit was estimated to be in the region of £100 million [ cite journal|title="Reorganisation of the Nationalised Transport Undertakings"|journal=Government White Paper, Cmnd. 1248|date=December 1960|first=|last=|coauthors=|volume=|issue=|pages=para. 3|id= |url=http://www.railwaysarchive.co.uk/documents/MoT_Reorg1960.pdf|format=PDF|accessdate=2007-09-21 ] . The Transport Act 1962 sought primarily to remedy this situation by putting public transport operators on the same footing as privately-run companies, thereby reversing the policy which had been in place since the earliest days of transport law, namely that the carrier was a monopolist to be controlled and regulated by the State for the benefit of the public.

New Financial Management Obligations

By virtue of Sections 36 and 38 of the Act, some of the debts of the British Transport Commission, including the funds invested in the failed 1955 Railway Modernisation Plan, were either written off or transferred to the Treasury, i.e. the taxpayer. Furthermore, the Board of British Railways was now directed, under Section 22, to run the railways so that its operating profits were "not less than sufficient" for meeting the running costs.

This last obligation to make the railways self-sufficient is a novel departure in UK Railway legislation and marks an important turning point. From now onwards, each railway service should pay for itself or at least have the prospect of doing so. The days of subsidisation of the railways was now clearly over. The change of policy was brought about by the Select Committee of the House of Commons on Nationalised Industries which concluded that the British Transport Commission should make its decisions exclusively on considerations of "direct profitability" [ cite journal|title=Report|journal=House of Commons Select Committee on Nationalised Industries|date=11 July 1960|first=|last=|coauthors=|volume=|issue=|pages=|id= |url=http://www.bopcris.ac.uk/bopall/ref8883.html|format=dead link|date=July 2008 – ^{[http://scholar.google.co.uk/scholar?hl=en&lr=&q=intitle%3AReport&as_publication=House+of+Commons+Select+Committee+on+Nationalised+Industries&as_ylo=&as_yhi=&btnG=Search Scholar search]} |accessdate=2007-09-21 ] . Where decisions based "on grounds of the national economy or of social needs" needed to be taken, the Minister of Transport would be responsible, having sought the approval of Parliament.

In future, the railways would now be operated on the principles applicable to any other private entrepreneur in a competitive marketplace. In that respect, Section 3(1) provides that it is the duty of the British Railways Board to provide railway services "in Great Britain" (not 'for') with regard to "efficiency, economy and safety of operation".

Break-up of the British Transport Commission

To facilitate the new policy, the British Transport Commission was replaced by five new public corporations:
*the British Railways Board
*the London Transport Board
*the British Transport Docks Board
*the British Waterways Board
*the Transport Holding Company (holding the shares of companies belonging to BTC, including Thomas Cook and Son Ltd)

The four Boards inherited the property, liabilities and functions of the BTC, but importantly their activities were to be co-ordinated by the Minister of Transport, rather than a body separate from the government. The Boards needed the consent of the Minister to borrow and would need his approval for projects involving large sums of money (Sections 19 and 27).

New Advisory Bodies

Nationalised Transport Advisory Council

Section 55 of the Act created a new body, the Nationalised Transport Advisory Council, which was set up to "advise" the Minister of Transport on the activities of the five corporations resulting from BTC's break-up. The corporations would all be represented on the Council.

Transport Consultative Committees

The Central Transport Consultative Committee took the place of a similar body that had been created under the Transport Act 1947 and was intended as a consumer body to represent users of the railway. In addition, Area Transport Users Consultative Committees were established to cover individual areas of the country.

The role of the Committees was to make recommendations relating to the services provided by the four Boards, although their remit did not include the charges and fares set by the Boards. The Minister was not bound to follow any recommendations.

Procedure for Closure of Railway Lines

A new procedure was set out for the closure of railway lines, Section 56(7) requiring that British Railways gave at least six weeks notice of their intention to close a line and to publish this proposal in two successive weeks in two local newspapers in the area affected. The notice would give the proposed closure dates, details of alternative transport services (including services which BR was to lay on as a result of closure) and inviting objections within the six week period to a specified address. A copy of the notice was also to be sent to the relevant Area Committee.

Rail users affected by a closure could also send their objections to the Area Committee (this was not required to be specified in the Closure Notice) who would then report to the Minister of Transport. The Area Committee would consider the "hardship" which it considered would be caused as a result of the closure, and recommend measures to ease that hardship. The closure would not then be proceeded with until the Committee had reported to the Minister and he had given his consent to the closure. Based on the report, the Minister could subject his consent to closure to certain conditions, such as the provision of alternative transport services.

Reform of the Law of Transport

The four Boards created after the break-up of the BTC were also placed in the position of private companies in respect of their commercial activities. They no longer had the status of common carrier transporting persons and goods for the public benefit, but were now simple bailees transporting goods and people like any other private operator.

The main effect of this change was that the Boards were no longer "absolutely liable" for their operations, i.e. bearing responsibility for loss even in the absence of negligence or fault on their part. Now they could restrict their liabilities in a similar fashion to private operateurs.

Another consequence of their new status was that from now on could they not only reject passenger and goods consignments and limit the exposure of their liability, but also were free to "demand, take and recover such charges for their services and facilities, and to make the use of those services and facilities subject to such terms and conditions as they think fit" (Section 43), i.e. benefit from total freedom of contract to sell their services, rather than operate via the medium of a statutory process. An exception was made for the London Passenger Transport Area where fares were still fixed by the Transport Tribunal.

In effect, as one commentator noted, "the Act goes much further in giving effect to laissez-faire in the law of transport than English law has ever done at any time since the seventeenth century" [cite book | last = Kahn-Freund | first = Otto | authorlink = Otto Kahn-Freund | coauthors = | title = op. cit. | publisher = | date = | location = | pages = p. 180 | url = | doi = | id = | isbn = ] .

Railway Byelaws

Section 67 of the Act enables byelaws regulating the use of the railways to be issued. This provision featured in the important case of Boddington v British Transport Police (1998) where the House of Lords recognised the principle that a defendant in criminal proceedings, in this case the defendant was fined £10 for smoking on a train in violation of a railway byelaw, could challenge the validity of the rule before a court, save where Parliament has indicated that such a challenge is not possible.

Current Status

Much of the Act has now been repealed and updated as a consequence of a broad range of later acts, further information can be found by searching for the act at the [http://www.hmso.gov.uk HMSO website] .

References

*UK-SLD|795068

Note

There are entirely unrelated acts of the same name in both Ireland ( [http://www.irishstatutebook.ie/ZZA25Y1962.html 1962 Transport Act Ireland] ) and New Zealand ( [http://www.brookers.co.nz/catalogue/legislation.asp?i=T&l=1351 1962 Transport Act New Zealand] known as the "Transport Act 1962".