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Is this the future?

Discussion in 'Heritage Railways & Centres in the UK' started by Steve, Jan 27, 2023.

  1. 61624

    61624 Part of the furniture

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    I think it is too early to draw the apocalyptic conclusions advanced by @Lineisclear for a little while yet It cannot be denied that the last two or three years have been difficult, but not all railways have suffered to the same extent, and actually some have done very well. I think, though, that it is taking longer than many expected to return to anything more than an approximate likeness of reality, and the current cost of living crisis will undoubtedly not help the recovery. Some things may never go back to where they were and I'm afraid that I do believe that there will be casualties along the way, and I also believe that the survivors will have to look very carefully at their individual offerings and how they promote themselves. @Lineisclear's solution for the NYMR is seemingly for their railway to hold its hand out for more grants, and I for one do not see that as being a viable long term solution. Rather, I think we have to keep faith with the fact that the public as a whole will still want to have an entertaining day out once in a while and do our best to offer them an enticing and value for money product that ensures they still want to visit.
     
  2. Matt78

    Matt78 Well-Known Member

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    I would agree generally with this. Some lines have done/are doing very well, and are probably in the best shape they have ever been. There would be some unlikely railways on that particular list as well if you made it.

    The challenges are common to most railways, the wage bill is definitely key as compared to volunteer support. Lines that have this right at the moment may find more pressure to employ staff in the future as the volunteer base reduces.

    I think we will see a subtle shift in investment terms from the dreams and aspirations of the founders of railways to the visitor experience. This may mean less extensions in the future, and more focus on the basics (for example).

    There are still opportunities eg gift aid on tickets could make a big difference as long as the railway structure allows it. This is definitely where the living museum ethos is important.

    some railway have proved very adept at reinventing themselves, for example one railway in the north has decided to focus on on train catering and is doing considerably better as a result. Polar and Light trains seem to have given others new impetus. This is the type of innovation required in the current climate. Reading this thread, no doubt some will find it easier than others to adapt.

    regards

    Matt
     
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  3. torgormaig

    torgormaig Part of the furniture Friend

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    Good to hear that, according to @61624 and @Matt78, some lines have done very well recently. Excellent news. I'd love to know which ones they are. It's not a secret is it?

    Peter
     
  4. Matt78

    Matt78 Well-Known Member

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    Success is something of a subjective term, and means different things to different people. Hence would not be fair to name names. A glance of the most recent magazines will show some headlines, most 2022 accounts won’t be available just yet if profit/cash is being measured.
     
  5. 35B

    35B Nat Pres stalwart

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    On the last point, it has previously occurred to me that one aspect of fallout from the Llangollen insolvency was the impact on people who'd prepaid for their services (not just Santa, but I think also weddings). If the consequence were to be that such funds had to be legally ring fenced and thus unavailable for working capital, this might be a major challenge for an already very seasonal business model.

    More generally, it would be interesting to have an insolvency practitioner's perspective on this topic. My experience as a trustee, based on expert advice, is that the more apocalyptic warnings about the consequences of actions are usually overstated, and assume not just the decision going wrong, and bringing the organisation down, but also a level of wilfulness. Similarly, it is not routine to hear of sanctions, civil or criminal, against directors and trustees of organisations that fail. My worry in a lot of what's being discussed here and on other threads is that the focus is on avoiding failure, rather than achieving success. As a new parent, one of the key pieces of advice I was given was to avoid telling my children what not to do - because the effect would be to focus their attention on the forbidden thing. So with avoiding failure - the centre of attention is what's being avoided, rather than what might be possible. Following that logic, I worry that about the focus and orientation of the generally very good posts by some on here may not realise the full potential of "their" railways.
     
  6. 61624

    61624 Part of the furniture

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    I don't think it's any secret that the IoWSR seems to have a good last year - and I know that Fairbourne did too, with highest passenger levels for some years, and there may well be others - I just think that the situation is more complex than some are making out and that perhaps recovery at the larger and more expensive lines is taking longer than expected. That doesn't mean to say that they will not get there in the longer term.
     
  7. Lineisclear

    Lineisclear Member

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    I'm rightly called on to clarify the comment about taking bookings when it should have been reasonably apparent to a competent Director or Trustee that the organisation will not be able to fulfill them. The offence of Wrongful Trading, for which Directors and Trustees can be personally liable, is more to do with accepting payment if it should have obvious that the service paid for is unlikely to be supplied because the organisation has had to stop trading The sensitive areas for heritage railways could be products/services like advance sales of dining trains, special events or even pre-booked seating.
    The observation was made in the context of snide remarks, sadly all too frequent, lamenting management and leadership by "the men in suits " as if the only acceptable management for a heritage railway is by volunteers who've already got their hands dirty. If they have the necessary skills qualifications and experience to keep the likes of the ORR , banks etc. happy that's great but being an experienced working volunteer doesn't necessarily equip anyone to run what can be a substantial business. It's extraordinary really that people do volunteer to act as directors and trustees of heritage railways knowing that they will be judged by the same standards as those in the wider world compensated handsomely for the duties and potential liability involved.
    I'm also happy to agree that there are opportunities to do things differently and to tap into new sources of surplus generating revenue. That will put a premium on the skills and tenacity of those individuals. Instead of the de-motivating social media attacks they are too often subjected to it would increase the prospects for a successful future if their vital contribution is recognised and celebrated.
     
  8. Lineisclear

    Lineisclear Member

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    Again to clarify Wrongful Trading only occurs if it should have been apparent to a reasonable director/trustee that the organisation is likely to become insolvent i.e . unable to pay its debts as they fall due.
     
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  9. 35B

    35B Nat Pres stalwart

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    I really like your first and last paragraphs there, but I struggle with the middle one. A really important point - that those running these railways need the right skills - is lost amongst a seeming disdain for the desire of working volunteers to influence the railway they invest so much of their time in. I'm of the view - borne of my experience in the church - that volunteers are not staff, but the most important customers. If management can't maintain and win the support of those people to run the railway, then the issue is more likely to be with the management rather than the volunteers. Change will alienate some, but it is really quite surprising how much change is possible when it feels as though it comes from within an organisation, rather than being imposed from outside. References to "men in suits" etc., in my experience, often reflect not a disdain for those managerial skills, but a sense that those people at the top have lost touch with core aspects of the existing organisation.

    I've previously referred to a tweet by "John Bull" on the "thermocline of trust", where loss of confidence sees a slow decline in engagement before a sudden, precipitous and irrecoverable collapse. A number of threads on here illustrate the earlier parts of that process at work; from outside, my sense is that some are doing better than others in recognising and responding to that risk - which I see as a greater risk to the future of heritage railways than the purely economic ones.
     
  10. Gladiator 5076

    Gladiator 5076 Part of the furniture

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    The problem becomes of course if you announce you may have financial issues going forward no one in their right mind is going to pay up front for something they may end up getting 2p in £1 on or nothing at all.
    In the more normal business world, or maybe in the the, and I use the word "heritage" in an environment that includes commercial operators why would you not wait for an opertion to fail & pick up the pieces at a reduced price.
    Whilst a totally different operation the directors of Flybe will have known they were likely to fail, and yet like any airline will have continued to sell tickets for flights way out in time and the vultures (other airlines) may have got wind as well and will have already been viewing the carcass to see what is worth having. The get out of jail free card that is usually used is we were expecting that funding was coming from "x source".
    It may of course be an argument that does not hold in the Heritage world unless the bank has pulled the rug, which is not exactly unknown as many companies have found out.
     
  11. burmister

    burmister Member

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    Agree with all that Line is clear has said.

    I read today the Bluebell and its PLC GM have now parted company as he is saying he could not get acceptance for the actions he wanted to get the Bluebell finances back on an even keel. I suspect his viewpoint that the Bluebell has too many non working assets and should take a close look at a disposal plan rattled more than a few of the members who kicked up a stink over the arrival of a 73 and 207 for economic Off-Peak duties and he was asked to fall on his sword.
    My head says he is right. The SVR, Bluebell, WSR NYMR etc are large fixed cost, employed staff multi million pound businesses and as such good business acumen must override all other considerations for them to have a long term future. They cannot afford to operate a heritage operation based on what was offered pre WW11 or even what BR dealt out to its long suffering customers in the 50s. For example, why the Bluebell needs to spend money on restoring and operating a 9F when it could operate 3 4MT tanks sharing parts and major items like boilers/wheels etc escapes me

    But my heart is equally as sad. For example as one who along with others donated a not inconsiderable sum decades ago for the unique Brighton Directors Saloon to be restored I now do not not expect to see this run again in my lifetime but life is life and it is what it is.

    Brian
     
  12. 80104

    80104 Member

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    Notwithstanding what business practice other organisations may or may not follow, should Heritage Railways place moneys, taken in advance for future travel, be placed in some form of escrow account that can only be drawn once the travel has been taken by the purchaser?

    So for example if XX Heritage Railway place Santa Specials (taking place in December 2023) on sale in March 2023 should those moneys for bookings made between now and the day of the event itself be placed in an escrow bank account?

    This would have a negative impact on the cashflow of the Heritage Railway. Despite this, and given the apparent fragility of the finances of many heritage railways, nevertheless would Directors and Trustees of Heritage Railways consider this to be essential given their legal duty / responsibility in relation to wrongful trading and to exercise reasonable care, skill and diligence.

    I wonder how
    (1) the HR accountants and auditors
    (2) the Charity Commissioners
    view such a suggestion.
     
  13. Jamessquared

    Jamessquared Nat Pres stalwart

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    For clarity / correction, it is the company Chairman who has resigned, not a General Manager (which we don't have). In other words, a Director (volunteer), not a manager (who would be an employee).

    Personally I don't believe focusing on disposal of non-operational assets - least of all heritage assets - is the correct strategy when the issue is about running costs. What happens when we run out of locos to sell? I'd support disposal of the non-heritage Mark 1s and further concentration on Maunsells / Bulleids; but disposal of locomotives is a much more emotive subject, particularly when one suggested has very significant Bluebell historical connections. It also - speaking personally - sticks in the craw if on the one hand we are disposing of non-operational assets because we have too many, while at the same time we are seemingly acquiring other non-operational assets. We don't have unlimited storage space. If the problem is we can't keep up with the maintenance on our rolling stock, why are we acquiring more?

    On your question about the 9F / three 4MTs: to an extent that is bound up in ownership, in that 80064 is privately owned, so what happens depends on the owners of that loco. 80151 is in traffic: personally I think 80100 would be preferable as a traffic loco to 92240, but it is a volunteer group who have stepped up to fundraise for the latter, and isn't a lot of the discussion of this thread touching on issues of volunteer alienation? Presumably that group have a reason why they have coalesced around 92240 and not 80100; it would feed into a lot of the issues discussed were an over-mighty PLC board to say "we know your passion is this loco, but we want you to focus on that one instead". What if their collective hearts weren't in it? In any case, neither loco is going to be a quick prospect.

    Tom
     
    Last edited: Jan 29, 2023
  14. thb17

    thb17 Member

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    I think a lot of volunteers want to be part of building something, watching something grow as an heritage operation and play trains. On a railway that is mature for example some of those listed above how do you balance that with a multi million pound operation - bearing in mind the bigger you get the more to maintain the more staffing costs etc. A good example of this is the gwsr stopping at Broadway, now I know a main line link at Honeybourne would be great operationally and many volunteers would love the challenge but means taking on huge future costs.

    I think heritage railways do work together quite a lot, but maybe cooperation through a proper body could be beneficial? How about a boiler pool for austerity's for example? Would that even be possible.
     
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  15. Lineisclear

    Lineisclear Member

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    I think that would need the advice of an experienced insolvency practitioner but my gut feel is it would'nt work. For instance my understanding is that in an insolvency Restricted Funds ( i.e those donated for a specific purpose) would be specifically reserved for creditors. If directors tried to carry on by putting funds in an escrow account it seems to me that could amount to a fraudulent preference favouring one group of creditors over the generality. Any one out there with the experience to answer definitively?

    My original concern was the most heritage railway directors and trustees are likely to find it difficult to accept that their instinct to protect their railway at all costs may expose them to personal liability. Even profitable companies with substantial asset bases go bust because they simply run out of available cash to pay the bills. Understanding that, and that directors/ trustees primary duty in a impending insolvency, is to the company's creditors may be a message that needs to be more widely understood.

    In answer to 35B I suggest there's a difference between management BY volunteers and management OF volunteers. Desirable though the first may be it's not always acheivable . The latter must be far more than "Do what I say" or "Just accept what we've decided". Decisions need to be explained and justified, although it's inevitable that not everyone will always agree. As so often expounded on here good communication is key.
     
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  16. 35B

    35B Nat Pres stalwart

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    There are certain forms of business where customers’ interests are placed above trade creditors, with funds held apart from ordinary funds (please note that I am avoiding technical terms lest my imprecision cause issues). I therefore doubt there are significant legal issues.

    However, there are practical issues. Such a policy means that a business cannot use that cash to fund the event, but must rely on existing resources. Even if that were sustainable in steady state, I suspect the transition would make many companies run out of cash.

    As for management, I see no distinction between management by volunteers or employees when it comes to their duties. The difference is in the credibility they may enjoy with a core constituency of customers and donors - and therefore in the management approach they need to adopt. When I volunteer, I can walk away at no real cost to myself. When I’m paid, the challenge is much greater. But when I’m paid, the relationship is more transactional. If I volunteer, and leave, the parting is more akin to a divorce.


    Sent from my iPhone using Tapatalk
     
  17. Pesmo

    Pesmo Member

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    There is actually nothing here that isn't already in place in other organisations. There are specialist agencies out there that take on the admin burden from charities, clubs and societies. I belong to a car club that handed all its membership process, invoicing, bill paying and general admin etc. to an agency years ago. The club leadership reckoned it was one of the best decisions they ever took as it enabled them to spend more time on actually supporting their members and doing other higher value activity and making the club successful. They also needed much less volunteer time doing the boring jobs where it was difficult to get members to volunteer anyway. My annual membership subscription for that club is not massively different to the cost of the various heritage railway societies that I belong, so the cost to do this per member cannot be excessive.
     
    Last edited: Jan 29, 2023
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  18. 80104

    80104 Member

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    If moneys paid in advance by a customer is being used to meet current costs then there is a strong possibility the organisation is insolvent. Most invoices for an event will be payable after the event but I accept that there are some up front costs that have to be met.
     
  19. 21B

    21B Part of the furniture

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    cashflow is the number one issue for a heritage railway (and most SME). Few have the working capital needed, and as a result there is a hand to mouth existence. This is fine and usually manageable, until there is some kind of shock to the supply of cash.
     
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  20. Bikermike

    Bikermike Well-Known Member

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    The "men in suits" line always saddens me.
    Not necesssarily. The test under the Insolvency Act is being able to meet their debts "as they fall due". If you have an event in 6 months time and have a reasonable expectation of getting more cash in the door to meet that obligation, paying the cash out now isn't a problem l, provided it is properly recorded and budgetted for.
     
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