Swanage Railway General Discussion

At the AGM the issue of paying for the three moguls was discussed. It was acknowledged that SRC need to get at least a second Mogul into service to justify the hire fees being paid.

The terms of the contracts are commercially confidential and were not disclosed but an impression was given that these contracts were less than ideal in the current climate having been agreed at a time when SR was seen to be a wealthy railway.

 

It would be pretty normal for a contract agreed pre Covid and the current global financial issues to be less than ideal now. The problem being of course that any contract can be amended or terminated early as long as both parties are prepared to negotiate on such an issue. However it would be difficult as an outside to understand why the loco owner would want to do that. We are not here talking about a BA or American Airlines going to say Boeing and threatening to cancel some orders or options for new aircraft if the price is not reduced. In that case there is, albeit maybe limited, leverage. Very difficult for me to see what the leverage would be in the case of the Moguls that the SR may have.
In many ways, other than the fact they are all allegedly "serviceable" very similar to the TPE situation with the 68's and Mk 5 sets.

 

But from
http://swanagemoguls.com/faq/
Isn't it a 25 year lease rather than hire?
Also long term the Moguls were to eventually run the Wareham service and some railtours where the SR got a grant for one Mogul (DMU or 33 as backup)?. But costs are now higher as mainline standards increased?

The lease could be renegotiated, but Bunch has fallen out with other railways and removed locos, but this time the SR might have the upper hand?

 

T3, T9, M7, N, 2 x U, 4MT, 2 x Bulleid. Really far more than the SR needs in the current climate. Something has to give at some point, and decisions made on which locos to lose.

 

The T3 is the only loco owned by SR, the others are all hired except the T9 which is leant from the NRM, the 2 Cl33's are also hired,

 

My error in describing the arrangement as a hire. SRC must have been extremely confident in the future to agree a 25 year lease for three locos without, afaik because no one has ever mentioned it, any form of break clause and that a Wareham service would be sufficiently revenue generative to justify the running of steam traction.

Yes a govt grant funded (not sure if in full or just part) the "kit" so that 31806 could run on the mainline.

 

That faq answer may use "Similar to a Leasehold Property" to try to keep it simple, but I am unsure of the relationship between leasehold property and a mobile leasehold asset.
Without knowing the contract (which we have no right to at all) it is all supposition, but from my experience of leased assets, be they at component level or at the prime structure level you end up paying a monthly charge, which is of course not what really happens with leasehold property. Now there may be a different rate for an in service loco compared to those out of service, or there could be a rate for the three thus letting the SR decide what they want to spend resource on.
I would expect the agreement to be similar to an aircraft dry lease, but the lessor will have valued those assets and the return they expect. So where is the upper hand that the SR has if aim would be to negotiate a lower lease cost? What is the offering that would lead to a lower lease price?
Remember in the mainline world the SWR 700's were replaced by the 701's (joke of course as they are still not in service) as the lease rates were way lower at the time due to low interest rates.
There may be various break clauses to allow the lease to be terminated, or there may not. If there are then that MAY provide some leverage if you assume no other line wants the locos.
The link you posted also appears not to have been updated for some years, so the aims may now be different where mainline operation or Wareham is concerned.

 

£1 million is a big round number. But without context it is pretty meaningless.

If SR had a turnover of £20m, a salary cost of £1m would be 5% of turnover.
If SR had a turnover of £1m, a salary cost of £1m would be 100%.

Neither of those are realistic. It may be interesting to compare what proportion salaries are to turnover among heritage railways and indeed other, visitor attractions and simpler businesses.

Yes, I know that quite a few heritage railways hsve 0 paid staff.

 

In the transport commercial transport business which I ran 30 years ago staff costs were about 35-38 % of costs excluding depreciation which was about average for a bus and coach operator

 

Am I reading that correctly - that the Swanage Railway is paying a lease fee for locos even though they aren’t in traffic? Wow! Shouldn’t it be the other way round (the owner paying for storage?)

With the exception of the T3, they aren't Swanage's to "lose" though? Where do you suggest they go - I can't see many other railways queuing up for out-of-traffic locos. It's back to a perennial sector-wide problem: there are more locos "preserved" than there is space to store them or overhaul capacity to maintain. The Bulleids at least have a very strong support network (i.e. SLL) around them.

Tom

 

Yes providing the context of the turnover would be informative (for the record SRC turnover is £2.98M in the last financial year) but irrespective of that the problem is that SRC has a financial blackhole of about £700k. As I referred to in my earlier post it is difficult to get a handle on what the exact situation is because of the ways in which numerous amounts are banded about.

As also mentioned in a previous post the three main costs are wages / salaries C£1M, coal C£280K, hire fees C£240K.

There are three "actions" SRC can take either solus or in combination:

Generate more revenue by either attracting more passengers or by raising fares.

Cut costs though self evidently "frying the big fish first" would be the normal methodology ie seek to reduce the wage bill

Raise other monies through gifts, donations, grants and gift aid (though this is a long lead item).

It is also worth noting that SRC has raised fares and cut services in 2023, any redundancies would be the third tranche since Autumn 2020 and the railway has already run a successful save our service appeal.

The merits and dismerits of any course of action can be argued / debated endlessly but the reality is SRC needs to do something of some magnitude pretty quickly or it faces meltdown because quite rightly the SRT may have to take a view on what it can and can not do and whether that places the SRT itself in jeopardy. SRT Trustees have a responsibility to the SRT.

 

Not many, I don't think, at least amongst the larger ones. Even the GWSR, which was long held up as an exemplar of a railway that ran without paid staff, does now have a small paid core.

From a trawl through various company accounts, comparable railways have the following numbers of staff as at their last set of published accounts:

Bluebell - 71 (not clear if that is FTE or headcount; I suspect headcount since there is a large seasonal catering operation)
Great Central - 103 (Again, headcount I believe)
GWSR - 11
Isle of Wight - 48 (That is headcount; the FTE is lower because there are some seasonal and part time).
KESR - 27 FTE
Mid Hants - 45 FTE
Swanage - 39 FTE
West Somerset - 50 (That is the plc; in addition I believe the WSRA has some paid staff).

From that, the Swanage is not exactly some outlier with a massive staff base; it is ball-park comparable with many in its peer group.

I wouldn't want to push the comparison too far, because each railway has a different structure and also has different facets it is responsible for and pressures on staffing. (For example, those railways that have a large catering offer tend to also have larger staff bases, since by and large catering is run by paid staff, not volunteers).

The other important point is "who does the work if it isn't paid staff?" One option is volunteers - but that requires a lot of organisation, and may be difficult to guarantee projects running to necessary timescales, i.e. capacity is driven by availability. The other option is you can outsource, as happened with the T3 - i.e. in the absence of a workshop with paid staff, you go to an external workshop and pay. But in financial terms, that is just a business decision: you swap one set of costs (paying full time workshop staff) with another set (paying an external contractor). So without looking deeply, it isn't automatically correct that a low staff base is inherently a good thing - you may just be paying out cash elsewhere and / or be unable to deliver your planned service for want of capacity.

Tom

 

There was some info on the Bunch hire arrangements in the 2014 and 2015 Trust Accounts, which has since been dropped. I attach the relevant sections of the 2014 accounts. The bit under Post Balance Sheet Events sounds as if there is an obligation on the SRC to overhaul the locos to operational condition (note the reference to a total commitment in respect of this estimated at £600k) but when I queried this (on this site) some years ago, there was a spirited response from someone to the effect that this did not mean what it appeared to say. and that there was no such obligation. The Bunch hire charge seems in more recent years to have been in excess of £100k p.a, pre-Covid.

 

That’s exactly the point. They don’t belong to Swanage, so (dependent on contracts) the SR is at liberty to say to the owners ‘we don’t want to hire it anymore, please take it elsewhere.’ Where they then go to is not the Swanage Railways concern.

This is what happened with 34072 and it readily found a new home in working order. I can see the same happening with perhaps 34028 or 34070. Given its current loco position, I think the Mid Hants might be quite keep to have one of them.

I’m not suggesting a mass departure of locos from Swanage. I just think in one or two cases it might make sense for locos to move elsewhere, save the SR money, and leave it with a more ‘right sized’ fleet.

 

The court of Nat Pres seems to know all the answers for the Swanage Railway.

Yet there are still vacancies for key roles on the Company board.

 

Thanks that confirms there is a break clause which can be enacted in 2028 for 2029.

 

IOWSR is, I think, different from all of these in owning all the land and equipment debt free. This was an enormous financial advantage during lockdown and after.

 

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Maybe the railway agrees with you Tom as the new RTC list just published does not contain a Swanage Belle. Of course one may be added later.

 

It's a small point in the overall argument but, unless things have changed recently, WCRC and Swanage use the same medical provider so the only difference in medical costs would be the addition of the necessary ECG for drivers on Network Rail if Swanage don't already require this.