North Yorkshire Moors Railway General Discussion

In my experience both Trust and Company accounts are completely useless as a way of assessing the health or otherwise of a Heritage Railway. Only the management accounts provide a “real” view. These organisations rely utterly upon cashflow management. Literally nothing else really matters.

On the subject of donations of various kinds. I think the best way to deal with them is to have a budget based on experience of what can be raised, and then a budget that takes that and the income you can earn and tries not to project spending all of it. After that it comes back to cashflow management.

 

As posted last week I am one such individual and had arranged to bequeath a significant sum. Certainly I belong to JNC's "good money after bad" definition together with the belief that unless there is a change of approach any bequest would be used to pay bank interest and/or administrative salaries.

If I knew that the money would be put towards a heritage project of lasting benefit then that would be different but in addition to general concerns the whole tone of those denying the need for policy changes as being "too difficult" are also a major factor in my change of mind. This not only applies to legacies but donations too. I'm surprised no-one has highlighted that a 33% decline in fundraising, a significant hole in the accounts, has co-incided with the rise in criticisms of recent management decisions.

Both a change of direction and a change of tone by those Trustees currently and recently in office would be welcomed. Restricting AGM question opportunities will only reinforce further antipathy.

 

Sophisticated tools rely on good data. For sampling, that will rely on a sufficiently broad data set to understand hwat an average might mean, and also to consider the demographic trends underlying.

I suspect that such a model would, at most, be useful at a sector level.

 

I think expecting loco overhauls to be paid out of running costs is extremely optimistic. For example, you could spend £100k on an overhaul and depreciate it over 10 years, so £10k per year. If you are really cute, you put £10k per year away for the next overhaul - and then find the next one costs £250k and you are still £150k short - just because that sort of thing happens! So budgeting for a single loco is really hard. And infrastructure similarly - your predecessors could spend £5000 on a bridge, depreciate it at £50 per year over 100 years and then you have to explain why the accrued money no longer pays the £250,000 repair a century later ...

Probably the best you can do is where you have a department (a C&W that needs to keep 30 carriages running, or a loco workshop that needs to keep 6 locos going) can probably work out an annual budget of sorts. The more assets you have the easier it is at least to budget - if, for example, you need to keep 30 carriages running and they need a 7.5 yearly door and lock, 15 year refresh and 30 year total overhaul each, then you can roughly predict how many of each you need to do each year: 2, 1 and 1 of each type each year. In other words, accurate budgeting requires throughput of projects of known magnitude, and locos really fall into that camp.

On legacies: it is a foolish organisation that banks on them in advance! You simply don't know what is coming.

There is also a slightly arcane point which is hopefully explained in the relevant accounts, which is that the general accountancy principle is that you need to represent legacies in your accounts when they become known about, but there is often a delay before the actual money is paid across and available - sometimes that can take more than a year. That means a charity that receives a large legacy and shows it in their accounts may not have that money to spend: hopefully that is explained before everyone starts mentally spending the cash!

Tom

 

NELPG and the LNERCA both promote heritage projects, both welcome legacies and would make good use of your bequest - have minimal administration costs! Just sayin'!

 

If realistic figures are put into the equation, the results are realistic. An industrial 0-6-0 is going to command £500/day and should be looking for 100 days/year. That’s £50k/year or £500k for the mythical 10 year ticket. A medium size ex BR loco needs to be looking at £1300/day and a similar number of streaming’s. That’s £1.3m. There will be some maintenance during that period to come out of that sum but those are realistic figures. Of course, some locos will not get 100 streaming’s but that’s the sort of target to be aimed for.
If a railway has its own locos, they need to be costed similarly and allowed for in the budgets. A line like the NYMR needing four locos/day needs to be budgeting about £5.2k/day or about £2m/year. We did a similar exercise on coaches a while back but I can’t remember which thread we did it on. I think we came to a conclusion that, for a fleet of 30 coaches, we were looking at about £1m/year to cover routine maintenance and major overhauls. Tom may be able to find as he was involved.
And that’s before you consider infrastructure and track.

 

There was a bit of a conversation that started about here: https://national-preservation.com/t...ors-railway-general-discussion.29732/page-407 (when, oddly enough, we were discussing the NYMR accounts ) though I am struggling a bit to get much consensus on a number.

I do wonder if there would be some "key performance indicators" that could be included in annual reports to give a view of the health of the line. You might choose:

- Number of passenger carriages available for traffic during the year
- Number of "home" locomotives available for traffic during the year
- Average "age" of loco fleet (and carriage fleet) since last major overhaul
- %age of the line subject to temporary speed restrictions

The trend in those numbers would tell you quite a lot about the long-term health of the railway in terms of whether it was putting sufficient into renewals of its key assets, all of which have long life cycles and are therefore difficult to cost. If your carriage fleet has gone from a nominal 30 to a nominal 20 over the last decade, something is probably wrong; whereas losing one carriage per year might go unremarked within the confines of a single year. Maintaining a steady 6 locos in traffic may look like a stable position to be in, but not if five years ago they averaged 3 years since last overhaul and now it is largely the same locos but they are on average 7 years since last overhaul. Similarly, if 10 years ago 5% of the line was subject to a TSR and now it is 15%, again, something is going wrong. At the very least, it would give figures upon which to challenge management, whereas cash figures can often be ambiguous.

Tom

 

I think they are good KPI's but what is a "home loco". Just one owned by the railway in question, or one just based there but owned by a third party?

 

I'd suggest that ownership is less important than residence, and make it any locomotive resident at the railway and maintained day to day by the railway's MPD. Specifically on the availability KPIs, I'd also suggest that these should be weighted by availability, not just "in the year" - the point being to show how much can be relied upon, rather than dragged out of the shed for the gala

 

On the NYMR locos fall into three categories, owned, service agreements and hire agreements. Only the latter cost money at the point of use, service agreements carry an obligation to overhaul at the end of ticket.

Sawdust.

 

Charity Accounts are recognized as being pretty impenetrable even by those who compile them! However there isn’t any alternative. The format and content are prescribed by regulation. I’m not sure the AGMs are the best events for a wider review. They tend to be sparsely attended because the business is primarily receipt of those complex accounts. It’s planned to hold a much more interesting meeting in the New Year to review the 2026 season (in contrast to the accounts which only cover the period up to the end of February) and to outline the prospects for 2027/8. For many that’s likely to be of more interest and benefit.
I think what Tom is suggesting is a sort of “sustainability health check”. That has considerable merit. In fairness I don’t think the Trustees and management are under any illusion that the railway is sustainable in its current form. The mention buried in those complex accounts of the need to secure an additional £1million every year is testament to that. Clarification of realistic ways the railway can become sustainable should help secure buy in from supporters.

 

I don’t solely go by what is said here, but looking at how for example your good self @Lineisclear stopped posting until you resigned from the board and other indications, it remains concerning that although you say that the board and management know the current situation is unsustainable, that is not openly being discussed with the members and volunteers. I do so hope that the board can find people who can communicate. Soon.

 

I can partially agree with some of the above but I think the planned meeting needs to be a firm commitment, preferably with a date, time and venue fixed in the calandar which can be attended by members and all questions fully addressed. Perhaps I'm being a little cynical as whilst an AGM is a legal requirement review meetings are not and can be forgotten or shelved if management find it convenient.

For supporters to "buy in", which I agree is both desirable and essential, sustainability is a must.

The elephant in the room is still costs exceeding revenue and the hoped for extra £1 million every year will only materialise if the former are drastically reduced. £2.7 million in admin costs for a company turnover of £7.7 million is ludicrous. 35% is mind blowing. If we could halve the admin bill that would be £1.35 million per year saved without any additional funding requirement at all.

 

I suggest that attendance is at least in part a function of the importance given to them by the organisation's leadership, demonstrated by the level of encouragement to attend and the space within the event (not necessarily as "AGM" business) for more in depth discussion.

It may not be the intention, but I get a pretty clear signal from a meeting held on a working day when the railway's not running, especially when it's stated that "There will be no presentations and very limited opportunities for questions", and that questions must be submitted a week in advance. It's certainly not an encouragement to attend

 

Picking up a couple of bits from there:

Charity Accounts are recognized as being pretty impenetrable even by those who compile them! However there isn’t any alternative.
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Well, actually there is. Provided you provide the minimum information set out in the prescribed standard, surely there is nothing preventing you providing supplementary management information to help give a clearer picture? Indeed, in the current accounts document you have already included some statistical information that isn't strictly necessary from an accountancy point of view - such as the annual steam and diesel mileages - so I don' see why you shouldn't include any amount of other information: the key is then to include stuff that gives a fair picture of the sustainability of the organisation.

Which kind of leads to the second point:

I’m not sure the AGMs are the best events for a wider review. They tend to be sparsely attended because the business is primarily receipt of those complex accounts
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Possibly so, though even if the AGM is sparsely attended, the AGM documents may be much more widely disseminated, so are an opportunity for a considered, consistent "state of the nation" to the members.

But more generally, this is really about communication. You have stated consistently that you don't believe the NYMR in its current form is a sustainable railway; and that the formal charity accounts don't easily illuminate that fact - but if you are right about the former point, that is the single most significant thing for members to be concerned about. So where is the communication plan?

BTW, please don't think I am getting at you individually, or even really the NYMR as a specific case. The issues faced by heritage railways have a lot of commonality across the sector even if there are detail differences from railway to railway. Those that flourish will be those that treat their stakeholders like adults in understanding the challenges they face. Whereas for some railways at least, the desire seems to wobble between "everything in the garden is rosy" right up until it isn't and "this is all far to complicated for you people to understand". The NYMR tends to fit uncomfortably in the latter camp; the WSR (previously mentioned) seemed to fit somewhat in the former, saying for a long time everything was fine and then suddenly announcing almost overnight that £500k per year was needed to fund infrastructure costs.

Tom

 

Does the NYMRT have a specific ban on legacies being restricted to XYZ project, for example a supporter may wish to ensure that their legacy donation is only spent on a particular coach or loco.
Would NYMRT Trustees refuse a legacy, that had such a restriction? Because the Trustees want to decide what to spend Trust money on?

 

I'm sure @Lineisclear can indicate the likely view of NYMRT trustees on this. As a trustee elsewhere, I'd want to think very carefully about such a restriction, and how it might fit with what else we would be doing. And, as a donor, if I thought there might be a risk to the recipient's solvency, I would be thinking about whether in extremis the restriction would remain effective - it can be broken, and not necessarily by donor consent (especially if a legacy).

 

When a legacy or donation is specified to be for a specific purpose charity Trustees must keep it in a Restricted Fund to be used for that purpose only. Problems occur when the fund is insufficient for its purpose or if it’s achieved without using all the funds. In those cases the money has to be returned. For that reason some charities will only accept restricted legacies or donations on terms that if either of those situations occur the funds can be used for other similar purposes. Care is also
needed to ensure that such Funds are not too high a proportion of the total otherwise the charity could find itself only able to spend on things that are not priorities while unable to fund those things that are. ( And at the end of the day the decision on what to prioritize is a fundamental responsibility of the Trustees.) My understanding is that in the event of insolvency the restriction would fall away and the funds would be available to creditors.

 

You are right to raise the "what if" in the event that a donation is insufficient - this is why there should always be wording on charitable appeals.

However, those are more relevant to appeals than restricted funds per se. For them, when I had to look up the process of altering restricted funds, the process is not rapid, nor guaranteed to be successful (the Charity Commission will play a role, as may the original donors)

That reinforces the importance of the decision making by the trustees where the gift is offered, as I wholly agree that having funds in Restricted Funds while the charity is unable to do its basic work would be untenable. I suggest, though, that such concerns would generally be a sign that the charity is very vulnerable - it is only where general funds are tight that this imbalance should be a major concern.