Transport Act 1962

By the end of 1960, British Railways had accumulated a deficit of some £500 million and the annual rate of increase of the deficit was estimated to be in the region of £100 million.[2] The Act sought primarily to remedy this situation by putting public transport operators on the same footing as private companies, reversing the policy that 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.

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

The obligation to be self-sufficient was a departure in UK railway legislation and marked an important turning point. Each railway service should pay for itself or at least have the prospect of doing so. The days of general subsidisation of the railways were 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 BTC should make its decisions exclusively on considerations of "direct profitability".[3] 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.

The railways would now be operated on the principles applicable to a private entrepreneur in a competitive marketplace. In that respect, section 3(1) provides that it was 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".

To facilitate the new policy, the BTC 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 and Thomas Tilling)

The four boards inherited the property, liabilities and functions of the BTC, but 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 for approval for projects involving large sums of money (sections 19 and 27).

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 to a specified address. A copy of the notice was 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.

The four boards were 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 bailees transporting goods and people like a 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.

A consequence was that they could reject passenger and goods consignments and limit the exposure of their liability, and 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. have 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.

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".[4]

Section 67 of the Act enables byelaws regulating the use of the railways to be issued. This provision featured in Boddington v British Transport Police (1998) where the House of Lords recognised the principle that a defendant in criminal proceedings, in this case 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.

Much of the Act has been repealed and updated: further information can be found by searching for the act in the UK Statute Law Database.

• Beeching Axe
• Canals of the United Kingdom
• History of the British canal system

• Text of the Transport Act 1962 as in force today (including any amendments) within the United Kingdom, from legislation.gov.uk.