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S&D Railway Trust and Washford Matters

Discussion in 'Heritage Railways & Centres in the UK' started by Andy Norman, Feb 24, 2020.

  1. simon

    simon Part of the furniture

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    I would assume, this being the WSR that's maybe not a good thing, that the railway finance dept has a financial model of its operations - with a forward projection in decreasing level of refinement as the years in the model progress. VAT and other payments would be modelled in this together with loco overhauls.VAT would be payable monthly or quarterly and would be reasonably easy to forecast and clearly if the VAT is due next month then you make sure that the cash will be available. Bearing in mind that a £500k overhaul isn't going to be spent in one jump sum. I would not expect the railway to be saying we need to overhaul this loco in say 5 years so we better have the cash available now. The financial model would then inform the debate as to what could and what could not be afforded given the need to fund certain activities (whether that's payroll or VAT) which cannot be avoided.

    I further assume (see above comment) that the new management have looked at the financial model and decided that actually not only can't they fund necessary short term projects, but that the models also indicates there are so many pressing demands that there is no way they are likely to find £500k over what period of time it might be required for the S&D loco.

    Whether this is because of the downturn in passenger numbers (COVID or the general down turn over the years that the WSR seems to have experienced) or because previous management ignored in their financial planning the worn out nature of the track and other assets, or some other reason, I doubt we will ever know.
     
  2. Bayard

    Bayard Part of the furniture

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    Perhaps a better example than my one above of VAT would be pensions, where you can either have a contributory pension, where the pension money is retained in a fund which cannot be used for anything else, or a non-contributory one, where pensions are funded from general revenue.
     
  3. Alan Kebby

    Alan Kebby Member

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    I believe the MHR do intend it to be temporary. To fill a need for a couple of years until other MHR locos are overhauled and back in service.

    After that I highly doubt it will return to the WSR. It would probably move to another railway, possibly under an overhaul and use it for 10 years agreement.

    I wonder if any legal action is being considered by the SDRT to recover what is owed by the WSR reneging on the agreement.
     
  4. flying scotsman123

    flying scotsman123 Nat Pres stalwart

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    I'd be surprised if, having had their fingers burnt once already, the S&D Trust didn't move to a daily steaming fee next time round. I'm not sure I'd have the confidence to try that sort of run and repair agreement again.
     
  5. Alan Kebby

    Alan Kebby Member

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    Hence why I said overhaul and use for 10 years, rather than use for 10 years then overhaul.

    I may be wrong but I don’t think the SDRT have the engineering abilities to overhaul it themselves. So an agreement where someone else takes responsibility for that is probably preferable. Obviously with a water tight agreement that prevents the same situation from occurring again.
     
  6. Lineisclear

    Lineisclear Member

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    Sadly the problem with “use then pay” agreements has occurred elsewhere. They seemed like a good idea at the time but there are so many inherent problems they are probably best avoided in future. Steaming fees or mileage rates work much better as does the “ pay for overhaul and recoup through free use” model.
     
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  7. ross

    ross Well-Known Member

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    I think Alan is suggesting a repair and run agreement, as a means of getting 88 overhauled. What would then happen at the end of that "run" period, I do not know, but if I were the lessor, and I had invested a half million quid in overhauling a worn-out locomotive, I'd need to get considerable work out of it. Provided it was not entirely knackered at the end of the term, I'd feel that morally my obligations were fulfilled.
    I seem to remember some years ago a railway had GNR 1247 on a run and repair contract but did not fulfil the repair part of the contract? So the current situation might not be without precedent
     
  8. Greenway

    Greenway Part of the furniture

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    Unless the WSR get a legacy or two, or a benevolent benefactor, I doubt they would have the wherewithal to honour their contract with the Trust. As an operating railway the PLC said it needed half a million pounds per annum to maintain viability. Whilst they are not presently operating and have reduced the outgoings, that figure is still pretty high I guess. Despite the many sources that have chipped in to the pot in the last year the total figure so far seems well short of any anticipated target. I don't believe some of those avenues of cash will be there again next year.
    Hopefully the SD Trust will, in the next couple of years, find a way a white knight or get a Lottery grant to overhaul their important locomotive. Its loss would be a set back for the Trust and the heritage movement. 4110 found a saviour, I am sure 53808 will also.
     
    Last edited: Aug 23, 2020
  9. D1039

    D1039 Well-Known Member

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    You can either have a funded pension arrangement where the pension money is retained in a fund which cannot be used for anything else, or (in State pensions and some public sector schemes) a non-funded one where pensions are funded from general revenue. Contributory and non--contributory simply refer to whether the employee does or does not contribute.

    As an analogy to the different forms of loco agreement I think a better one is with defined contribution and defined benefit schemes.

    A defined contribution one is whether the employer [in this case the railway] pays a fixed amount of contribution [hire fees]. The risk that will be insufficient for retirement [overhaul] falls on the employee [loco owner].

    A defined benefit scheme (aka final or average salary) guarantees an outcome, the value of the pension [the overhaul] and the employer [the railway] guarantees to make up the difference if the employer's contribution [the provision the railway makes] proves insufficient. That's the one that '88 has.

    I think I've mentioned this before but the agreement for '88 is far from unique. The SVR has several engines on such a basis.

    Patrick
     
  10. flying scotsman123

    flying scotsman123 Nat Pres stalwart

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    Ah apologies, I misread, although you don't necessarily need the total facilities to overhaul the engine to achieve it by daily steaming fees.
     
  11. garth manor

    garth manor Member

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    As transport is zero rated providing it is an actual journey the WSR should normally be in a repayment position for VAT assuming fares are the major source of income, higher than refereshments, souvenirs etc.
     
  12. gwilialan

    gwilialan Part of the furniture

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    Isn't there someone close to the railway with two or three loco's (allbeit that they might be too big and heavy for use on the WSR) who would probably be happy for them to go through the workshops to keep the staff employed - at the railways expense of course... :rolleyes:
     
  13. jma1009

    jma1009 Well-Known Member

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    I suggest some of you are forgetting the details of the last set of WSR PLC accounts.

    Page 25 states the provision for '88''s overhaul was overstated and was therefore reduced. At the time the accounts were signed off by the WSR plc board, 1st November, the WSR plc was reaching the end for that year of steaming '88' for a staggering 148 days.

    Yet the WSR plc board must have known well before 1st November last year that it was going to have to reduce the provision on the last accounts to get them approved by the auditors.

    I immediately picked up on this when the accounts were submitted to Companies House.

    I won't comment on what happened that previous Autumn of 2019, except to say the SDRT trust was made aware the WSR plc board made it known they felt unable to pay for the loco's overhaul under the agreement, but not explicitly. The upshot was the SDRT offered to pay for a new tender above the frames, that arguably is more of a financial begging bowl contribution than the WSSRT donated to the WSR plc board in January.

    At this stage, it was a plea of temporary penury on the part of the WSR plc board - as opposed to a clear statement it would not honour the legal agreement - which did not occur till the statement of 4 or 5th May this year.

    It would seem to me that the last WSR plc board accounts were not honest and much detail withheld from the auditors that would have been relevant.
     
    Last edited: Aug 23, 2020
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  14. Less than five weeks until WSR plc AGM, so accounts to 31 March 2020 are due to be published.
     
  15. jma1009

    jma1009 Well-Known Member

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    I have always been of the view that the substantially reduced provision in the last set of accounts for '88''s overhaul allowed the auditors to approve the last accounts. Had they been aware of all the relevant facts, I doubt that the accounts would have been approved
     
    Last edited: Aug 23, 2020
  16. jma1009

    jma1009 Well-Known Member

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    It also seems to me by the latest accounts that the WSR plc board decided to terminate the agreement for the LMS loco and must have known they would attempt to do the same for SDRT '88' at the time of the latest set of accounts, but instead continued to use the loco intensively last year.

    I am of the view that JJP should have stated to the SDRT early in 2019 "We can't afford or pay for the upcoming overhaul under the legal agreement - so get an extra year's hiring fees in 2019 elsewhere ".

    Instead, what did he do? 148 steaming days of '88' in 2019! When he knew he was going to renege on yet another legal agreement and shaft the SDRT not once but twice
     
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  17. Kempenfelt 82e

    Kempenfelt 82e Member

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    As Tom explained earlier, the provision for 88 need not be a pot of money but just a provision in the overhaul queue noting that the railway allocated say £200k a year to loco overhauls. Clearly for whatever reason, the decision has been taken that 88’s overhaul will no longer be financed by the PLC but i’d still expect the PLC to intend on having a loco go through the workshops, albeit I highly doubt this is unlikely to be 88 now.

    With 4110, 6990, 44422 and 53808 all being pushed away from the railway, what does this leave left for the railway to send through their own workshops? 6024 should be completed soon, 7828 and 9351 both have a few years left yet. Surely this results in an overhaul slot being opened up at Minehead? 4936 seems to have made little progress at Tyseley for quite some time now, I wonder if we’ll see Kinlet take 88’s place at MD!?

    It would seem to me that the WSR is going to find itself with a bit of a loco crisis in the not too distant future. Aided of course by several loco owning groups being alienated or driven away from the railway. This could result in the number of available loco’s or loco’s offered being much reduced, limiting options to where they can go to for the possibility of engines for hire. Could see some of the remaining WSR based engines benefiting from plenty of extra miles and steaming fee’s over the next few years!
     
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  18. Kempenfelt 82e

    Kempenfelt 82e Member

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    What if the eviction decision was made on the back of the decision that 88’s overhaul wouldn’t be funded as contractually agreed? If the SDRT has to worry about funding an expensive relocation as well as having only a couple of years steaming fee’s to accumulate funds funds for an expensive overhaul, then it certainly reduces the available finances for any potential legal challenge?
     
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  19. shed basher

    shed basher New Member

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    The problem I see with having Kinlet in place is it being a red route loco, and how long until the railway can run them again? Whereas there is a manor in Swindon, could they not bring that back and start work?
     
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  20. ghost

    ghost Part of the furniture

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    That's ok as long as they don't need any repairs or even a washout - then you have a loco shortage. You are also possibly building up a future problem by intensively working a small number of locos and therefore wearing them out more than would normally be the case.

    Keith
     
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