The Transport Act allowed the GLC wide powers and discretion to achieve a good public transport service in London but it ha to do so on ordinary business principles. The GLC sought to reduce traffic congestion by raising rates on London residents to reduce the cost of public transport and thereby incentivise people not to use their cars. HL held this policy to be unlawful because the GLC was not allowed to take into consideration social factors such as traffic congestion in reaching a decision based on ordinary “business principles”- social goods are irrelevant considerations to this end.
Lord Scarman: If, on ordinary business principles, a venture cannot be run without making a loss, this does not authorise the GLC to go out of its way to make an even bigger loss. NB the section in question required not just that the system be “economic” but also “efficient” and it is likely that as economy dominates, efficiency is lost. Arguably therefore the courts were substituting the balance between the two struck by the GLC with their own decision on the merits. This goes beyond what they are allowed to do under judicial review.