North Yorkshire Moors Railway General Discussion

What choice do they have though for the moment?

To your other point I hope that some serious market research is being done. I am going to go against the grain here for a moment, but I would be very interested to model the impact of increasing the fares further. How many people would still pay?

One idea in my head is whether you could recast the gift aid so that it applied to Pickering to Grosmont trains by making a Whitby trip a separately priced offer. On top of the “entry fee” for the core railway. Then only running a small number (maybe just one each way) services to Whitby at this much higher price and carrying the remaining passengers now incentivised (we hope) to “make do” with the shorter trip over the core railway. I am not saying it would work out, but if it had the effect of reducing costs (not everything would be having to be FTR’d daily for example, you might gain a cost saving that was significant.

 

I was wondering a similar thing in the middle of the night. Though my thoughts were more of classing the Rover as the internal section and completely separating the Whitby ticket to a Grosmont to Whitby addition. So you buy a Rover and if you want to go to Whitby you get that seperate ticket.

The bit where I got stuck is the fact that the NYMR and HMRC have been having the argument about Whitby already so its not new. Once somethings been decided and accepted its hard to reopen the can of worms. But I really can't see how HMRC could win the argument in court should it ever get to that.

Though in my dreams I did find it interesting that the Whitby section was classed by a government department as in control of the NYMR, and wondered that with that being the case whether Northern Rail could be pushed out of any of their paths to make it easier for the NYMR. After all if its a part of the NYMR they should have control of when they use it surely? At the very least you could have two government run teams arguing with each other which would help the NYMR case.

 

Tax law operates in its own universe, so I see little hope in that!

The language used has been that of the “entire operation”, not “control”. I struggle with the interpretation, but tend to see that as being another example of where the nature of the NYMR has pushed the bounds of the original intent, and forces a complex interpretation.

More seriously, two things leap out at me here. The first is that any pushback by NYMR will expose the “museum” question to challenge, and leave it open to argument that what NYMR does is not actually provide a museum but a transport service to Whitby.

The second, wider, question is about the quality of analysis that NYMR have undertaken about the implications of moving to a Gift Aid model.

So much of the discussion has been about this or that reactive decision that I fail to see any sense of long run pricing strategy, or view of how to sustainably maximise income in the long term. I then see, demonstrated in the 2025 fares structure, a panic reaction to losses of “we must put prices up”, without considering the effect on demand.

That culminates in pricing a premium event at less than the cost of the only available day ticket, sold in a way that doesn’t allow a Gift Aid claim on those sales (and in the absence of a Whitby service, it is seeing the entire operation).

 

"I was wondering a similar thing in the middle of the night"

You need to get out more!

 

I've not been on this thread for a few days, but I'd like to thank @Jamessquared for providing some analysis on the PLC profits and losses that I posted last week, its certainly generated some healthy debate.

 

Where's the evidence for the claim of a "panic reaction" and not considering the effect on demand? That may be an opinion but it's not fact. What is true is that costs have risen substantially and prices have followed suit. There can be a consequent reduction in demand but the judgement is whether lower fares would stimulate enough additional demand to produce a greater financial return. The NYMR has access to and uses a wealth of data covering the hospitality sector and regional tourist attractions in particular. It takes considered and calculated decisions taking account of that data.

The diesel gala focusses on the Trust owned part of the line with no services to and from Whitby. That means the daily cost of operating that section is not incurred so the fare for Pickering /Gosmont only can be set by reference to operating costs for Pickering/Grosmont only taking account of the likely demand. In that context a £45 fare is calculated to acheive the best finanacial return from the event. A non-gala Pickering/Grosmont fare of £35 has been suggested but as per earlier posts the question is whether any resulting additional demand would more than compensate for the reduction in current income especially where the Gift Aid is recovered. The data suggests not. Perhaps a normal non gala Pickering Grosmont fare of £45 might be a more realistic option?

Much is made of the HMRC decision to only allow Gift Aid on all line fares but that apparently bizarre ruling needs to be seen in context. Perhaps some critics have not checked the Trust's chariatble purposes for a while but they include " the operation of heritage steam and diesel trains over third party owned or controlled lines". Operation to and from Whitby is part of the Trust's public benefit purposes, Consequently the HMRC decision is not as irrational as it may appear. The relevant legislation makes it clear that Gift Aid is only recoverable on an admission charge to view the work of the charity. The NYMR is not alone in having been able to satisfy HMRC that a ticket for end to end travel over the whole line to which its charitable purposes apply can be accpeted as a qualifying admission charge. It seems likely that others will try to be similarly successful.

 

The question then must be whether it was ever necessary to include the stated clause in the charitable objectives? Or, if the intention was to include operations further afield - e.g. to Battersby or Middlesboro - it could it not have been argued that all it needed was for very occasional "specials" to be fulfilling that objective? As usual, it seems that trying to be too clever has made a rod for the railway's back.

 

Thank you for that response, and elaboration.

You responded on two specific items, that I'd like to pick up on - gala pricing and "panic". I used both of those to illustrate my perspective that there is a deficiency in strategic thinking, and I find it interesting that the answer focused on specifics, not the broader point.

Indeed, I'd say that the defence of pricing for the gala is both fair, and illustrates the fundamental issue in pricing strategy - that it locks the railway into seemingly contradictory policies. And, if £45 is the profit maximising point for the gala, what does that say about day to day pricing on the railway? As a supporter of Gift Aid fares, I'm really struggling with the flip between two models, especially when combined with a direct price rise.

Since Covid, NYMR pricing has moved through several structural evolutions, as services have been trimmed and headline prices risen. Anecdotal evidence suggests that loadings are down and falling, with potential customers are being deterred by the pricing. If the objective is to be able to operate (excluding investment) at break even or profit, I get no sense of how the pricing strategy is designed to support that, or build long term customer loyalty. On the other hand, that anecdotal evidence suggests that the approaches are proving counter-productive.

In a climate of ongoing material losses, I'd say that the changes of approach do point to panic. And, if not, then quite possibly to a deeply divided board being torn on approach.

 

Let me start my reply by stating that I really want the NYMR to succeed, as I'm sure most of us on here do. Regardless of the Gift Aid issue, or other factors that contributed, the pricing change this year has created a lot of noise because of the level of change. It looks like a complete knee jerk reaction from the outside. Add in the fewer operating days, the continued lack of Teaks and the fewer services on most days they are operating its not hard to see why its become an emotional talking point this year. Its put many people off travelling (myself included), created many complaints (at least vocally, I haven't got data of official complaints), and quite a few poor reviews. If the change had been managed more gradually I doubt the reactions would have been as severe.

 

It is of course entirely possible to move to a better financial situation by charging a higher price and accepting a lower volume of sales.

It does look at a glance quite peculiar to charge more for a “standard” day than a gala, but in fairness the customer bases are different, and there may not be a big crossover. I’d feel more comfortable with the answer having been “£45 per day for a diesel gala is what we think that market will bear”.

I find the HMRI decision most peculiar. Surely people are visiting to view the work of the charity regardless of whether they do so for a single station trip or a full line trip including Whitby?

It is possible that the various changes in pricing structure are a plan to learn what works. If that is the case, then I think I would say that, at least internally even if I didn’t broadcast the strategy widely. Otherwise many will draw the conclusion you have which is that this all looks like a bit of a flap.

 

Did the NYMR ever explore whether a Gift Aid, “Grosmont - Pickering only” fare was available in addition to the Whitby -Pickering?

You’ve made much play on the HMRC deeming that the price had to include viewing the “whole” work of the charity, and that including the Whitby section. But are you sure there is no option for GA on tickets that only allow viewing part of the property?

If I visit Salisbury Cathedral, I can get a ticket with GA reclaim that allows me to visit. But actually it doesn’t allow me to see everything, essentially it is a “ground floor only” admission. If I wish to see the Tower, or the Library, or visit the Stonemason’s yard, those are additional cost. So it seems to me that they are offering a Gift Aid admission model, but which doesn’t cover viewing the “whole work of the charity”: there are areas that can only be accessed at a supplementary charge. The booking website allows you to add the extras as a bolt on”upsell” at time of booking.

If you expanded that to the NYMR, then the logic would suggest that a model that allowed a ticket just for Pickering - Grosmont with Gift Aid (the “Ground Floor only” option) with an additional charge for extension to Whitby (the “add in a Tower Tour” option). So I can’t see why HMRC are so insistent about the only gift-aidable fare being one that also includes running across property not owned or managed by the charity, and which is explicitly designed as a transport option to leave the property! It seems utterly perverse to me.

Tom

 

All of those could be valid answers, and I'd accept them. The problem is that, over the past few years, each one of these changes has been introduced as some kind of magic bullet.

I do accept that the enthusiast market is different from the general market, and that the pricing will reflect that. What I'm struggling with is when in the year it falls, and what this says about the mix of costs and income. It is not that £45 is too cheap (it feels the top end of reasonable), but that the other fares feel wrong - and that if NYMR don't have a critical mass of demand, they will struggle at any price.

 

In fairness to HMRC, they have many issues about part-applicable taxes (talk to a self-employed optician about VAT on frames if you want an example). I can well see that they might argue that the journey is indivisible, and that the extras have to be clear and distinct. Recollecting discussion at the time of introduction, I recall some haste and a belief that this was essential - hence being implemented very rapidly.

 

The journey clearly isn’t indivisible though, because there are intermediate station where you can board and alight! Indeed, I think you could make a very strong argument that it is only by getting on and off that you could genuinely see the whole work of the charity. If all you can do is go to Whitby with no recognition of the intermediate stations, it does look suspiciously like a transport service!

(For clarity - it’s a big place, and timetable constraints inevitably mean it is unlikely that you could design an itinerary to visit all of them in one day. But you ought to be able to visit any given one on a gift aid ticket if the purpose is to say that you are visiting the work of the charity).

Tom

 

I agree with you - but we are talking about HMRC, who are professionally paranoid about attempts to avoid tax. The example of dispensing opticians was deliberate, where each practice has to negotiate separately about how much of the price of a pair of frames is fitting, and how much a purchase. One is VAT eligible, the other not. That causes significant complexity. Taking @21B's suggestion, I'd be even more cautious because of the unintended consequences of addressing what is a donation, and what a purchase - and then bridging the two as part of a commercial shotgun wedding.

I'm sympathetic to @Lineisclear on this one, not least because I think the "museum" part of the case is far from the strongest part of the case, and that a close examination might raise a number of challenges.

 

I'm not suggesting part gift-aided donation and part purchase - I'm suggesting tiers, all of which could allow Gift Aid.

Coming back to my Salisbury Cathedral option, as far as I can see I can book entry (£11) and a stone mason tour as a bolt on extra (£22) and when I get to checkout, can treat both as donations for Gift Aid purposes. It isn't one gift-aided admission with a non-gift aid bolt on. (Open to correction on that, but that is the distinct impression I get going through the booking process).

Tom

 

Tom, you're absolutely correct. Another good example is the National Trust where you can typically Gift Aid admission to an histotic house OR the gardens.
The requirement in the NYMR's case for admission to the whole railway is not logical. However, it reflects some very poor drafting in the enabling legislation and, as 35B has helpfully pointed out, an understandable reticence by HMRC to concede substantial tax concessions. I'm tempted to suggest it was a case of "be thankful for small mercies" except that over £450k extra income was hardly small! The judgement call is whether challenging HMRC's interpretation might put the hard fought concession in jeopardy

 

Who says there'll be a reduction in income by offering a lower fare? How many people turn up on a whim, see the fare for a couple of people will be over a hundred quid and turn away? If people want to go to Whitby by train, they'll go. You need to attract people to the railway itself who will spend money there, not in Whitby. £35 return, £15 cream tea, simple.

If you're charging £15 for one stop, £25 for two stops, then logically three stops is £35. You can't charge £45 when it'll be £40 if they buy tickets separately!

 

No need to worry. Both boards are united.

 

Operating to and from Whitby ( and to Battersby for a while) pre-dates the current Articles by some years. The Charity Commission is very clear that charities must not stray beyond their registered charitable purposes whilst acknowledging that can all too easily happen. There was no mention of such operations in the previous Articles so their legitimacy was questionable despite the members having voted in favour of them. The opportunity was taken to redress that omission when the current articles were put to a vote of members