Bromley LBC v Greater London Council

Facts

The Transport (London) Act 1969 required the Greater London Council to develop policies to promote the provision of integrated, efficient and economic transport facilities and services for Greater London, and empowered it to make grants to London Transport. After a Labour administration took control of the council on a manifesto promising cheaper fares, the council substantially reduced fares and financed the resulting deficit by a supplementary rate levied on the London boroughs. Bromley, one of the boroughs, which would bear a share of the cost while gaining little from the cheaper fares, challenged the fares policy and the supplementary precept.

History

The Court of Appeal held the supplementary rate and the fares reduction unlawful, and the council appealed to the House of Lords.

Issue

What the statutory duty to promote economic transport services required of the council; whether it could adopt a policy of cheaper fares funded by a supplementary rate in order to honour an election manifesto; and what duty the council owed to its ratepayers in raising and spending money.

Held

The council's appeal was dismissed. The fares reduction and the supplementary precept were unlawful because the council had misunderstood its duty to promote economic transport services and had disregarded its duty to ratepayers.

Ratio

• The duty to promote economic transport services meant that the undertaking was to be run on ordinary business principles so far as practicable, with the deficit kept within reasonable limits; the council could not adopt a social policy of deliberately low fares funded by a large subsidy from ratepayers.
• A local authority owes ratepayers a fiduciary duty in the management of its funds, and must balance the interests of those who pay with those of those who benefit; it cannot treat a manifesto commitment as releasing it from its statutory duties or as a reason to disregard the interests of ratepayers.

The judgments

Key reasoning

• Read as a whole, the 1969 Act contemplated grants to meet the deficit of an undertaking run on business lines, not subsidies to implement a deliberate low fares policy.
• A broad discretion given to an elected authority is exercised subject to a duty to the ratepayers, which is fiduciary in character, so the council had to consider whether the burden it placed on ratepayers was reasonable in light of the benefits.
• A manifesto commitment is something an authority may take into account, but it cannot displace the requirement to consider afresh, when exercising a statutory power, the matters the statute makes relevant.

Where it fits in the module

On the FHS Administrative Law list under relevant and irrelevant considerations. The House first construed the statute to identify what the council had to take into account, namely business principles and the interests of ratepayers, and then held that the council had treated the manifesto as decisive. It is the standard example of the political sensitivity of reviewing local government and of the difference between legality and weight. It can be read with Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997 on statutory purposes and with Wheeler v Leicester City Council [1985] AC 1054 on irrelevant considerations. Candidates may debate whether the court substituted its own view of the proper policy.

Criticisms

• The meaning of economic was a matter of statutory interpretation which happened to decide a major political choice, so the decision blurs the line between reviewing legality and substituting judicial views on policy.
• Describing the duty to ratepayers as fiduciary is a loose analogy with trusts: it says little about how competing interests are to be weighed and risks over-protecting ratepayers against users and the wider public.
• The ruling that a manifesto cannot displace statutory duties is sound in principle but leaves unclear how far an elected authority may legitimately give weight to its mandate as a relevant consideration.