North Yorkshire Moors Railway General Discussion

I'd take issue with your observation about responsibility to other shareholders being moot. Of course you're righgt that there is no market in the shares nor are dividends payable but on a solevent winding up those other shareholders are entitled to repayment of their invested capital. It's easy to confuse voting control of the subsidiary with wholly owned status but they are very different in their effect on the responsibilities and accountability of the PLC board.
I don't think anyone has suggested that the Trustees aren't ultimately accountable for achievement of the charitable purposes.

 

Again, sadly, the focus is on pinpricks of detail that are not fundamentally about good governance. The duties in relation to a solvent winding up are vanishingly unlikely in the normal course of business, and inherent to running a solvent business - the current conversation being held in the context of sustained high levels of losses over time, and deferral of the AGM having the effect that the latest annual accounts are unavailable. If winding up is in contemplation (which I doubt), it would be in a different context - where the duties would themselves be different.

But I then come back to the role of the Trust board. I'm not suggesting that you are saying that the Trustees are not accountable for delivery of the charitable purposes. Rather, I am suggesting that the operation of the split between Trust and PLC is having the effect that the Trust Board is saying "not me guv" when it comes to anything more than the fulfilment of those charitable objectives, but the structure is set up so that there is no accountability for the PLC other than to the Trust board. This is the critical weakness of the arms length model.

For me to delegate means to ask someone else to do something on my behalf, where I retain accountability for their performance. It is often confused with buck passing, which involves the same transfer of work, but where the person "delegating" does not then take ownership of what is done.

In other organisations I've taken an interest in, the trust/plc distinction has mattered at an operational level as a way of identifying who do what, and who make what decisions. But it's never otherwise diluted the sense of ultimate accountability.

 

One thing that has changed since my time on trust board, as far as I'm aware, is regarding the plc board. The rule used to be that nobody that benefited financially from the railway was allowed any control, so no directors of either board could be employees. Heads of departments attended plc board meetings, could attend trust board if they wanted or were asked to (although could be asked to leave the room) but had no vote.
Today the plc board has multiple employees as directors, presumably with voting rights. Nobody can successfully fulfill the roles of both poacher and gamekeeper and one of the reasons we haven't seen the annual losses fall dramatically is because to put it quite frankly, turkeys won't vote for Christmas.

Sawdust.

 

It seems you are suggesting there is some accountability , presumably to Trust members, over and above achievement of the charitable purposes, for the way the railway is managed by the PLC? You would be correct that the long standing corporate structure does not allow for that. It’s a key reason why limited companies and incorporated charities are not really suitable for organisations where the members expect the railway to be run more like a democratic preservation society. It’s also why I’ve been a proponent of conversion to a Community Benefit Society where unlike traditional structures the members are shareholders with a financial stake in the railway.

 

The same potential for conflict of interest exists with working volunteers who understandably want to ensure they have opportunities to enjoy volunteering. If, for example, financial considerations suggest that the number of operating days should be reduced a trustee who is also a working volunteer might be tempted to vote against because of the personal effect the decision would have. Whether it’s employees or working volunteers acting as directors the principle is to recognise conflicts if interest and ensure that conflicted individuals do not vote.

 

You are continuing to focus on formal accountability. At that level, I'd tend to agree with your suggestions about the right structures, but note that where latitude has existed, the Trust has in practice tended to lean the other way unless pressured (e.g. the use of the nominations committee).

However, accountability is about more than just formal accountability through votes at annual meetings. And that's where I keep coming back to the question of tone. Political scientists with an interest in democracy play close attention to not just the existence of elections, but also the strength of "civil society", and especially how that is or is not supported within a country. And that's where the "it's the PLC" message combined with a focus on formal governance leaves me cold. It doesn't send a signal of inclusion, but of exclusion; not of common purpose, but of "they're in charge". There's a couple of GMs of other preserved lines who report the good and the bad very openly in their posts on here, and generate significant engagement for their railways. Yet at NYMR, the same information is closely guarded.

The term is intensely politically loaded now, but I'd suggest that a policy of active inclusion would do NYMR a lot of good. Not in the sense of applying EDI, but in terms of really pro-actively seeking to include those with views and voices within the railway, drawing them in and creating the circumstances where they can feel included in how it operates. That's not the vibe that emerges at present, and my sense is that it's limiting what the railway can achieve given it's very straitened circumstances.

 

As you say, conflicts exist and need to be managed. But on one board I sit on, we have a real problem of quoracy when voting on pay - because so many of those on the board (mostly ex-officio) have a conflict. While I disagree with the principle @Sawdust outlines, I do share his concern that the balance may have tipped too far

 

There’s a difference between inclusivity, which involves a choice to reap the rewards it offers, and accountability which is based on a duty. As regards the desirability of greater inclusivity we’re on the same page.

 

Ahem. In saying "arguably wrong in detail", which part of "I actually wasn't distinguishing" (between the two) passed you by?

(I cheerfully admit that in writing my original post, I actually hadn't considered that, technically, there are two separate boards involved here; as I indicated, that was mostly because I was merely quoting what the original post I was replying to said. More importantly, I was more focused on replying to that post's broader point - which I read to be, roughly, that 'criticism of the governance of the NYMR is un-founded'.)

This dive into the exact division of powers/responsibility between the two boards is, to me, what we used to describe (in the Internet technical community) as 'getting lost in a rathole' - i.e. diving down into focus on excessive detail on an unimportant tiny corner of a larger point. If I had thought about the two boards, I would have quickly dismissed such thought as unimportant and irrelevant: one has to assume that the two boards are in close and rich communication; and how their overall responsibilities are divided between the two (irrespective of what the position of English law is on this point) is actually important only to them, and not to those outside.

What is important is that i) the NYMR as a whole is losing money, and ii) it does not seem to be very good as directing what limited resources it does have to its most pressing needs. Whose end of the ship is sinking is not very important.

Noel

 

My experience is that volunteers are very much focused on costs, maximising income and maintaining the assets.
You are falling into a trap, where you think volunteers only want to fulfill operating roles. I can assure you that any desire to run more services either per day or across the year by operating volunteers gets sat on by the representatives of the non operating departments such as pway, s&t and so on, who equally require non operating days to carry out their functions efficiently.
I am now wondering, if you have (other than trust board roles) done any volunteer tasks other than signalling?
My colleagues and I have not restricted ourselves to restoring LNER carriages exclusively but have also partaken in various other activities, either helping c&w, assisting with s&t recovery missions, infrastructure projects and special events.
You also assume that a plc board that excludes employees voting prevents them from putting their case to either board, it doesn't. Nor does it mean that you have a plc board consisting only of volunteers. I remember co-opting various senior railway industry figures on to the plc board when on trust board, during which time the railway successfully negotiated a major recession.

Sawdust

 

The objective of the two boards working in harmony is currently being achieved. It was definitely not so on a number of occasions in the past largely as a result of lack of clarity over their respective roles and responsibilities. Ideally it should appear seamless. It’s much nearer to that ideal today.

 

The answer to your personal question is question is Yes.

I made no such assumption. Trustees and directors who are employees or volunteers and may be conflicted as a result can and should argue their case but if they are conflicted they should no vote on that matter.

I recall the days when we tried to engineer membership of the PLC board by those from outside with potentially relevant experience. It was’nt a roaring successs.

 

Management of conflict of interest is not just about who votes - depending on the nature of the interest, even participation in a discussion may be an issue. With this level of confusion, I have concerns about the broader understanding of conflict of interest.

 

Having been involved (as a volunteer) in departmental management, I have never in that time heard any volunteer argue for more services just because they want more opportunity to volunteer. That just feels like a red herring. In part - as you have argued - volunteer resources are scarce and in my experience, the vast majority of volunteers can have as many turns as they want without creating any new duties.

I have heard volunteers argue for (and have done myself) more or revised duties where there is an operational requirement that current service patterns don’t meet. An example of that is where current service patterns don’t allow sufficient scope to ensure training of future volunteers - for example, if your competency requires working unfitted trains, you have to run a minimum number of them for training and maintaining competence, and that may require arguing to run trains that aren’t themselves directly remunerative. But if you had a paid training / competence manager, they would be making the same argument - it isn’t about arguing for something just to enhance personal opportunities.

Tom

 

"In my personal opinion", I think you should add, as I don't think that it is either a commonly held opinion , or one justified by the ongoing financial issues.

 

For goodness sake, please don't suggest yet another manager be added to the list of employees ! (because, of course, they would have to be employees, for all sorts of reasons!)

 

I suggest that trying to engineer the membership of the Trust Board, via the selection committee hasn't worked well either.

 

That’s true although the essential issue is that potential conflict should be recognized. If the conflicted board member has points to make that do not relate to his or her personal interest they should be free to make them.

 

You can’t have it both ways - the Trust board might have delegated responsibility for running the railway in a safe and financially sustainable way, but it can’t delegate the accountability.

So to take your point - if you (as, until very recently, a Trustee) believe that the current structure is not well optimised and a CBS would be better, then as a trustee you are accountable for putting in place the steps to thoroughly investigate and validate that view - and if it is in fact right, implement it. Because if changing structure to a CBS is in the best interest of the charity and you nonetheless don’t pursue it, then you are failing in your duty as a trustee.

Tom

 

I agree, but with the reservation that there may be some matters (where I'm a trustee, the example of a sale of land is used) where a conflict of interest could be so profound that this director should even be excluded from sight of the relevant papers.

For what it's worth, I'm not convinced that the issue highlighted by @Sawdust is really about conflict of interest, and I also disagree with the view that the board membership should not include paid staff. Given the discussions over several years of corporate culture, my sense is that there is a high degree of groupthink, and that a culture has developed in which challenge to a prevailing orthodoxy has become very difficult. While I'm inclined to suspect that this has to some extent been engineered through the use of selection committees and patronage powers, I also suspect that it is much deeper rooted and has evolved naturally over time.