A Naked Sword for the B.T.C.
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The House of Lords Decision in the W. H. Smith Case Arms the Cornmission with a Weapon that Could be Used to Destroy Independent Operators Without Compensation By A. E. Sherlock-Mesher, F.R.S.A.
THE decision of the House of Lords in the case of W. H. Smith and the London Transport Executive gives the British Transport Commission carte blanche to operate road passenger services anywhere in Great Britain, subject only to route approval by the Licensing Authorities. No road service licences need be obtained and independent operators can be driven off the roads without compensation.
This is a terrifying situation and one which few operators can have contemplated when the Transport Act, 1947, was passed. The Act did not purport to nationalize road passenger transport in the way in which it dealt, for instance, with long-distance road haulage. By Section 2 it gave the B.T.C. power to run road passenger servicek "subject to the provisions of this Act," and under Sections 63-65, provided for the preparation of area schemes by an elaborate procedure and for the payment of compensation to operators whose undertakings were acquired.
Coach and bus operators felt that they were safe from the immediate effects of the Act. The Licensing Authorities seemed to afford adequate protection for the interests of established concerns against unreasonable competition by the B.T.C. and its acquired companies, and only the promulgation of an area scheme could rob an operator of his business. That illusion of safety has been shattered by the Law Lords.
It seems that the licences at present held by the companies acquired by the B.T.C. may be redundant.
As conditions attaching to load service licences include the regulation of fares, the question of the Commission's obligation to have fares sanctioned by the Licensing Authorities arises, and is being argued to-day in the Court of Appeal. This matter did not, however, emerge from the Smith case.
A Simple Expedient One of the differences between the Smith case and the appeal by the British Transport Commission and Red and White Services, Ltd., which is to be heard by the Court of Appeal, is that the London Transport Executive had the powers of the Commission delegated to it by an instrument of delegation. The Red and White company had not, and the question has arisen whether the mere ownership of all but two of the company's shares by the B.T.C. qualifies the company to be regarded as the Commission itself. Any doubt could in future be removed by the simple expedient of an instrument delegating to each of the acquired companies the power of the Commission. Section 65 of the 1947 Act relieves the B.T.C. from the need for obtaining road service licences to run "any passenger road transport service, whether under a scheme . . . or otherwise." It is on the crucial words, "or otherwise," that so much depends. Lord Simonds. with the concurrence of Lord Normand and Lord Morton of Henryton, held that, in conjunction with the general powers conferred by Section 2, they gave
the B.T.C. absolute authority to run buses and coaches anywhere without a road service licence.
Lord Oaksey took a different view. "The words, 'or otherwise'," he said, "are perfectly apt to refer to the other ways in which the Commission may provide I,passenger road transport services under the specific terms of the Act, viz., by vested or acquired undertakings, and cannot, in my opinion, be construed to alter the construction of Section 2 of the Act. It is intelligible that, where the Commission was operating a scheme approved by the Minister or an undertaking vested in or purchased by the Commission, the licensing provisions of the Act of 1930 might be modified, but it seems to me impossible that it can have been intended to enable the Commission to avoid the necessity of making schemes or acquiring existing undertakings by exercising the capacities or powers assumed to have been conferred by Section 2."
Capacity, But Not Right Lord Oaksey maintained that the provisions of Section 2(1) were expressly interpreted by sub-section 8 by the words, "For the avoidance of doubt, it is hereby declared that the preceding provisions of this section relate only to the capacity of the Commission as a statutory corporation." The section conferred power, but not the right to exercise it, said Lord Oaksey. "it is obvious that it is one thing to be capable of doing something; it is another to have the right to do it," he added. Unfortunately, this was not the majority opinion.
As the London Transport Executive is the properly delegated agent of the Commission, the absurd situation arises in which the L.T.E., established ostensibly as successor to the London Passenger Transport Board to operate in and around the capital, could extend its undertaking anywhere in Great Britain.
If the B.T.C. uses the powers which it has been held to 'have, the Licensing Authorities will be unable to carry out their duties effectively. Already, they are hindered in the work of assessing accurately the need for new facilities in road haulage, because the Road
' Haulage Executive's freedom from licensing deprives them of essential information. A similar position would arise in passenger transport. No longer would the Licensing Authorities be able to satisfy themselves, as they are required to do under the 1930 Act, that any given service was necessary or desirable in the public interest, because they would not have a clear picture of the facilities generally available over the route or routes in question.
Although under Section 3 the Commission has a general duty to exercise its powers "to provide, or secure or promote the provision of, an efficient. adequate, economical and properly integrated system of public inland transport," the Act does not prescribe the measures which the B.T.C. may employ in pursuit of those ends. It could well be argued that temporarily o flood an area with vehicles and drive independent operators out of existence was justified in the ultimate ichievernent of integration, which, the Commission has :learly shown, it considers is possible only by unified ownership.
Alarming Possibility
Lord Oaksey and Lord MacDermott were obviously ilarmed by this possibility, although there was no ;uggestion that the B.T.C. would use its powers so ruthlessly. They did not believe it was ever intended hat the Commission should acquire such omnipotence.
"The drafting and arrangement of the Act are not, is it seems to me, what one would expect if, behind all he special provisions -under which power to run passenger road services for particular areas is, or may be, conferred on the Commission, there exists all the :ime the general and pervading power" of almost inrestricted operation, Lord MacDermott averred.
"Again, when one considers the duties of the :"...ommission under Section 63, regarding the preparation and submission of area schemes . . . there is, to my mind, difficulty in thinking that the Legislature intended lo confer upon the Commission a general power to provide such services anywhere, subject only to securing route approval under Section 65," he said.
The provisions of Section 63 (2), which directs the ,commission, before submitting a scheme, to consult 3tlier affected operators, and the requirements of section 64 (4) that compensation shall be paid to a person whose undertaking is not taken over but whose, iervices within the area of the scheme are prohibited 3r restricted by the scheme, appeared to Lord MacDermott to be "strangely at variance with the power by which the Commission . . can, without any scheme or any compensation, enter into competition with a duly licensed private undertaker, and use their enormous resources to drive him off the road."
It is indeed difficult to believe that any Government, no matter how biased, would deliberately create such an anomaly. It exists, however, in the view of the Law Lords, and must speedily be removed by amending legislation.
Lord MacDermott continued his argument against the power of unrestricted operation of coaches and buses by the B.T.C. by saying: "The whole vital policy of Section 72 of the Act of 1930 is invaded and the power of the Licensing Authorities to regulate services according to requirements is seriously impaired. It would indeed be strange if the Commission had power to run a service along a route which the Licensing Authority considered adequately served and in respect of which it had for that reason already refused to grant, further licences. I am not satisfied that the Legislature intended to render such a situation generally possible, or to encroach to such an extent upon the province and functions of the Licensing Authorities."
The road passenger transport industry will echo the words, "It would indeed be strange. . . ." Unfortunately, fact is often stranger than fiction.
Power—by Luck The Minister of Transport himself can hardly be less surprised than coach and bus operators at the crushing powers which the B.T.C. has fortuitously acquired. He cannot have realized that his own Act conferred on the Commission the right to unlimited operation, and the power, if it chose to use it, of destroying the whole established road passenger transport industry and causing chaos in a perfectly regulated system of services. Otherwise, why should he be so anxious that area schemes should go forward? If his ends could be achieved without the need for area schemes, why go to all the trouble arid expense of preparing them?
This is yet another proof of the danger of hasty, violent legislation. The present Government, as the direct descendant of that which perpetrated the mischief, should take immediate steps to undo it. A new Bill must be promoted to make unmistakably clear the Commission's obligation to obtain road service licences for services run other than under area schemes, and to compensate any operator whose interests are damaged.