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Railways, structures, fundraising and democracy...

Discussion in 'Heritage Railways & Centres in the UK' started by Jamessquared, Feb 5, 2013.

  1. Jamessquared

    Jamessquared Nat Pres stalwart

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    Yes, I think the 9f is definitely super large, though it has the disadvantage as a flagship of not having a name or being painted a bright colour. (The lines preserving the GWR are lucky in that respect that even quite humble engines, like Halls and Manors - ones that filled the same sort of niches as S15s and U boats - had names).

    As for our loco policy: I also think on paper it is right. The problem is resourcing it in people, facilities and cash. That's not a problem the Bluebell is unique in facing, hence this thread!

    Tom
     
  2. Grashopper

    Grashopper Member

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    It's not just preserved lines that struggle to resource funding, man power and facilities, we face that on the "big railway" too...

    I have utmost respect for anyone who undertakes the role of fund-raising officer on heritage lines. It seems like a lot of thankless work (possibly not always appreciated by railway members) but can make a big difference.

    I am aware that some railways have a dedicated officer to deal with lottery funding applications.
     
  3. HowardGWR

    HowardGWR New Member

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    Yes it wandered off very quickly into stock and geography, and Tom has brought it back. There is an organisation, to which I assume all heritage lines belong, called the RHA and its chairman has (had) a column in Steam Railway or was it Railway Mag (I don't see those currently).

    He seemed to have his head screwed on and I wonder if the RHA has collected data, from which a realistic prognosis could be made. It would include ages of volunteers, replacement data and so on. This is the kernel of possible problems in the future, together with market forecasting analysis. Are people getting fed up with traipsing up and down lines at 25 mph. How much resource is being 'wasted' on main line specials and so on.
     
  4. ellisteph12

    ellisteph12 New Member

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    Very interesting topic. Out if interest Tom if your charitable arm owns 72% of the company, who owns the rest of the Bluebell?
     
  5. Jamessquared

    Jamessquared Nat Pres stalwart

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    Technically it is the Society who own 72% (that's the membership body). The charitable arm is a separate Trust, which has the normal charitable powers to reclaim Gift Aid on donations etc.

    As for the remaining 28%, they are owned by a large number of small shareholders. Technically anyone can buy shares: you don't have to be a BRPS member, though I suspect there aren't many shareholders who aren't members. Obviously I haven't got access to the share register, but I get the sense that most shareholders have fairly token amounts in the range of few hundred pounds to low thousands. There isn't much point as a shareholder amassing a holding of hundreds of thousands, since it wouldn't generate any power - unlike on a line where the small shareholders have a controlling stake.

    A significant difference between our structure and, say, the SVR, is that on a PLC matter, the Society (the member body) can't be outvoted, because of the 72% shareholding (and by constitution, that number can't fall below 51%). The downside is that it effectively limits the rate money can be raised through share issues to an annual rate basically equivalent to the surplus income through membership fees. Effectively that basically means about £100k per year, or more likely, about £1m - £2m every 10 - 20 years is the absolute fastest that the plc can raise capital. Of course, that is why we have a Trust, since the fundraising powers of that body are essentially limitless and moreover, Gift Aid can also be reclaimed where appropriate.

    Tom
     
  6. ellisteph12

    ellisteph12 New Member

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    Thanks Tom, really interesting. Always wondered how shareholders slot into heritage railways alongside members society's.
     
  7. Jamessquared

    Jamessquared Nat Pres stalwart

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    Having the commercial arm as a PLC has certain advantages: primarily you can raise capital by share issues. However, it also comes with disadvantages. For example, in our case at least (and it seems a generally good idea), we want the member body (the BRPS) to own a majority of shares in the PLC, so the members don't lose control of what the commercial arm does or its assets. However, a charitable trust can only own shares as part of a sound investment strategy (i.e. shares that realistically will pay a dividend and / or gain in capital value, thus enriching the Trust and allowing it to spend the income on its charitable activities). It would thus be precluded from owning shares in a body that had the stated objective of not paying a dividend and in which there was realistically no chance of a capital gain! So the BRPS can't simultaneously be a charity and own shares in the PLC. I believe one or two railways constituted as charitable trusts have had their knuckles rapped by the Charity Commission for effectively using charitable funds to buy capital in their own PLC, which might be in the financial interest of the PLC, but is most definitely not in the financial interest of the Trust.

    Which is why we have a tripartite structure of Society - Trust - PLC. Conceivably you could merge the Society and Trust functions into a single charity while maintaining commercial operations in an arms-length fully-ownded subsidiary, but that would mean the commercial company couldn't independently raise share capital. Though for smaller organisations (and maybe even bigger ones) that will always be a rather expensive way to raise money, so you would be better off concentrating all fundraising activity via a Trust and reclaiming Gift Aid. I believe the KESR is an example of a line with a bipartite structure: the member body is a charitable trust, with a wholly owned non-PLC company serving to manage the commercial affairs on behalf of the member body.

    Tom
     
  8. Miff

    Miff Part of the furniture Friend

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    I would call this a unitary structure since the wholly owned subsidiary is wholly controlled by the membership body, unlike the other examples where the member body only has partial ownership of the PLC, together with other owners (shareholders) who may or may not also have joined the member body.

    A disadvantage of this unitary structure is that a charity cannot issue shares.
     
  9. GWSRBlogger

    GWSRBlogger New Member

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    Don't decry the dear old MK 1's. something we have have o remember is that for many off out 'visitors' Mk1's are the carriage of there memories. I have just become a pensioner, shock horror! So thinking back to when I started to notice anything railway that wasn't belching smoke it was the Mk1. The older stuff is just quaint and old but not railway as I remember it. Working in the C&W department I suspect that even a full metal restore of a Mk1 will be a lot less than the extensive wood work of older carriages.

    As has been said most of our unrestored carriages are still pretty well complete so if we have to ake new, which we usually we have a reasonable pattern to use.

    Also mentioned has been the skill sets available. Guess what metal workers are more abundant these days than good woodworker.

    you also have the advantage that being built later the bogies are undoubtedly longer lasting. Most railways can do ups carriage wooden or metal. Very few, less than a handful, are capable of dealing with worn out wheel sets and springs.

    I haven't studied the sums but I am very interested in the early posts debating the annual running cost. Carriages are definatly not going to last more than about 10 years with out a carriage shed. (Oh how we would love a carriage shed). Looking at the figures presented we should be abe to come up with a formula for the annual running cost of any heritage line. Ie No. of locos x annual proportion of rebuild cost + No. Of carriages x annual proportion of rebuild cost + length of line x annual proportion of replacement cost + no of bridges x ? + no of culvert x ? + length of tunnels, viaducts embankments etc and ALL of this before you get to staff costs.

    Then you can do that calculation of the income required. Set that against passenger number and start panicking about how to raise the rest. People just don't do those sort of sums. Perhaps a good thing otherwise we would never have started a heritage railway.

    And by the way I object to being referred to as a member of the unwashed. I volunteer and wash, ok I don't always shave before turning out.
     
  10. TimJNV

    TimJNV New Member

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    I think Middleton has got it pretty much spot on for how a railway should be run, managed and what should be prioritized, and been engineering led has provided 4-5 operational steam locos plus plenty operational diesel locos and workshop facility that enable a relatively quick and efficient overhaul of rolling stock, having this in place enables the rest of running a railway to happen far more smoothly. I guess 50 years of operation is testimony to this.
    There are new railways privately owned, that have gone in as a business venture and employed people from the beginning which in some cases is money well wasted and completely unnecessary. If it is survive more than 5 years it relay needs a refocus to where many of the successful railways started giving the volunteers a say and the control of how it is run not used as the free labour. running an heavy timetable with worn out locos over questionable track is only ever going to end in tears for all concerned.
     
  11. gwr4090

    gwr4090 Part of the furniture

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    Interesting comments, Tom, but I'm not sure that your interpretation is quite correct. I gather that a charitable body may indeed purchase shares in a no-dividend company, provided the purchase is directly in furtherance of its charitable aims. As an example the West Somerset Railway Association (a members support association and a charity) holds shares in the entirely independent WSR plc which is the railway operating company which pays no dividend. The Charity Commission is apparently quite content with this. A lot of charities could not function if they were only permitted to invest their funds in projects which generated a direct financial return !

    David
     

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