Heritage railway financial problems.

[GlitterUnicorn]

Also such freight running attracts more visitors and generates more publicity, often there are associated photographic charters which help to pay those bills.

The key difference here is between "attracts visitors/generates publicity" and "makes a profit". An activity is loss-making if the costs exceed the income it generates.

Interesting that you mention education and museums. I don't quite understand the educational benefit of running half a dozen old wagons up and down the line. Railway museums though are actually quite popular. The NRM is one of the UK's most visited museums. Train World in Belgium is also very popular, especially with people who would never actually go to a preserved railway. You can see hands on a wide variety of trains and understand the history behind them.

Most preserved railways hoard what would be amazing exhibits, often hidden away in sheds or rusting away in sidings. While presenting to the world maybe 1-2 locomotives at a time, along with a selection of dilapidated and uninteresting carriages. Also charging far more than a museum for the 'privilege'. Actual historical value varies, most lack interpretation boards, information on stock/carriages or anything like that. Lots of kitsch 30s-50s railway themes but not much history.

It's great to see trains running, but maybe it's time to stop kidding yourselves that most preserved railways are run like museums, rather than run as a full sized trainset for volunteers - members of the public a distinct afterthought.

 

[Titfield]

The key difference here is between "attracts visitors/generates publicity" and "makes a profit". An activity is loss-making if the costs exceed the income it generates.

Interesting that you mention education and museums. I don't quite understand the educational benefit of running half a dozen old wagons up and down the line. Railway museums though are actually quite popular. The NRM is one of the UK's most visited museums. Train World in Belgium is also very popular, especially with people who would never actually go to a preserved railway. You can see hands on a wide variety of trains and understand the history behind them.

Most preserved railways hoard what would be amazing exhibits, often hidden away in sheds or rusting away in sidings. While presenting to the world maybe 1-2 locomotives at a time, along with a selection of dilapidated and uninteresting carriages. Also charging far more than a museum for the 'privilege'. Actual historical value varies, most lack interpretation boards, information on stock/carriages or anything like that. Lots of kitsch 30s-50s railway themes but not much history.

It's great to see trains running, but maybe it's time to stop kidding yourselves that most preserved railways are run like museums, rather than run as a full sized trainset for volunteers - members of the public a distinct afterthought.

The National Railway Museum has free entry (which encourages admission) and is located in one of the UK's most visited cities. (NB that is a bit chicken and egg of course).

The reality is that most HRs rely on legacies, donations, grants and free labour to balance the books. The challenge going forward is that the gap between revenue (from ticket sales, catering and retail) and cost which is currently plugged by the aforementioned legacies, donations etc etc is getting wider by the year. There will come a time unless things change that the gap cant be plugged and one or more heritage railways will go bust or have to be bailed out by a very significant loan or donation (or of course go bust, llet the creditors take the hit and restart).

I have to agree with the point about interpretation. Too few heritage railways explain the development of the railways and the key role they played in British Life until, arguably, the cuts of the 1960s by Beeching et al.

 

[Flying Phil]

Actually I didn't mention museums in my post because I think that a heritage railway is much more than a museum. As GlitterUnicorn states " Its great to see trains running" and yes it is difficult to quantify exactly how much income running trains and freight trains in particular generate but...as Titfield realises Heritage railways balance their books with several other income streams. I also accept that interpretation can be poor at times but it is a delicate balance between having boards, displays and other information sources and the ambiance of a historical railway.
Not all railways run freight trains as "... half a dozen old wagons up and down the line".

 

[paul1609]

Could some heritage railways not do more to generate their own energy using solar panels. Quite a few lines have modern ancilliary buildings used for workshops etc these would in particular lend themselves to having solar panels fitted as they would not impact on the appearance of traditional structures. Even roofs of traditional buildings could be used if the panels were not visible from normal viewing locations.

Possibly, at our railway myself and others have invested an awful lot of time and energy (sic)investigating various schemes but have yet to find a workable scheme where we have to borrow the money to invest in the scheme. I understand that up country some railways have got grants or interest free loans from regional funds etc.
At our railway problems include a time/date mismatch between consumption and generation, lack of capacity in the local distribution grid to accept other than very small schemes for feed in. Distance between the new buildings and the point of consumption. Our main station area is also a conservation area. It's actually much more difficult that just putting a 4kw on a semi and in our case at least the lack of a scheme isn't through lack of effort. One of the current schemes being investigated is a micro wind turbine at Wittersham Rd which is a modern slant on a Colonel Stephens philosophy.

 

[Titfield]

Possibly, at our railway myself and others have invested an awful lot of time and energy (sic)investigating various schemes but have yet to find a workable scheme where we have to borrow the money to invest in the scheme. I understand that up country some railways have got grants or interest free loans from regional funds etc.
At our railway problems include a time/date mismatch between consumption and generation, lack of capacity in the local distribution grid to accept other than very small schemes for feed in. Distance between the new buildings and the point of consumption. Our main station area is also a conservation area. It's actually much more difficult that just putting a 4kw on a semi and in our case at least the lack of a scheme isn't through lack of effort. One of the current schemes being investigated is a micro wind turbine at Wittersham Rd which is a modern slant on a Colonel Stephens philosophy.

I looked at solar power and was some what put off by the so called pay back time which even then relied on some quite generous assumptions as to the future cost of energy. For me one of the biggest concerns was the likely true life of batteries and inverters. The current feed in tarriffs are paltry and do not justify generating to sell as opposed to generating to use. I cant help but feel that Heritage Railways could do better elsewhere with their money but of course if there is specific grant funding then the arithmetic changes somewhat. Whilst I do not suffer from being "green eyed" (jealous) a certain railway in Yorkshire does seem to get a very considerable amount of funding / benefit both direct and indirect. It does rather amuse me that when levelling up is being talked about there are many parts of the south that actually could also benefit from some levelling up funds too.

 

[paul1609]

I looked at solar power and was some what put off by the so called pay back time which even then relied on some quite generous assumptions as to the future cost of energy. For me one of the biggest concerns was the likely true life of batteries and inverters. The current feed in tarriffs are paltry and do not justify generating to sell as opposed to generating to use. I cant help but feel that Heritage Railways could do better elsewhere with their money but of course if there is specific grant funding then the arithmetic changes somewhat. Whilst I do not suffer from being "green eyed" (jealous) a certain railway in Yorkshire does seem to get a very considerable amount of funding / benefit both direct and indirect. It does rather amuse me that when levelling up is being talked about there are many parts of the south that actually could also benefit from some levelling up funds too.

Kent did actually get some levelling up money by far the bulk of it was spent on access to the Port of Dover to resolve the Brexit chaos.

 

[Titfield]

Kent did actually get some levelling up money by far the bulk of it was spent on access to the Port of Dover to resolve the Brexit chaos.

Thanks. Im not sure how much Dorset or Somerset got or indeed what any monies were spent on?

 

[43066]

Not all railways run freight trains as "... half a dozen old wagons up and down the line".

It seems a baker’s dozen old wagons are being run up and down the line pictured…

 

[paul1609]

Interested Video by the Welsh Highland Ffestiniog GM.

 

[Swimbar]

Whilst I do not suffer from being "green eyed" (jealous) a certain railway in Yorkshire does seem to get a very considerable amount of funding / benefit both direct and indirect. It does rather amuse me that when levelling up is being talked about there are many parts of the south that actually could also benefit from some levelling up funds too.

Of course it could be that the 'certain railway in Yorkshire', which features in a new Channel 5 Programme started this week, has somebody who is better than many others at marketing and filling in the forms to get multiple grants.

 

[Flying Phil]

It seems a baker’s dozen old wagons are being run up and down the line pictured…

Actually there were 25 vehicles in that train....and we will be running a 50 wagon train on June 17th as a tribute to the GCR 50th Anniversary of running in preservation.
Despite the difficulties and overall economic uncertainties, it should be noted that there are far more heritage railways expanding than are failing.

 

[43066]

Of course it could be that the 'certain railway in Yorkshire', which features in a new Channel 5 Programme started this week, has somebody who is better than many others at marketing and filling in the forms to get multiple grants.

The fact they are featuring in a Channel 5 documentary at all suggests someone in their marketing/PR team has been fairly shrewd?! Albeit they have something of an advantage, as there probably aren’t many heritage railways on a big enough scale to generate enough material for a documentary series?

It would be interesting to know whether the railway gets paid for the filming, as such, or whether they view the publicity as valuable enough to do it for free.

Actually there were 25 vehicles in that train....and we will be running a 50 wagon train on June 17th as a tribute to the GCR 50th Anniversary of running in preservation.
Despite the difficulties and overall economic uncertainties, it should be noted that there are far more heritage railways expanding than are failing.

Good to hear!

 

[Titfield]

Of course it could be that the 'certain railway in Yorkshire', which features in a new Channel 5 Programme started this week, has somebody who is better than many others at marketing and filling in the forms to get multiple grants.

Well imho there are many factors to this:
(1) If you dont ask you dont get: ie someone at the Yorkshire Railway is undoubtedly driving grant etc applications.
(2) Yorkshire seems to be the flavour of the month: The Yorkshire Vet, The Yorkshire Auction House etc etc
(3) The levelling up agenda
(4) If you need to fill the can bigger operations offer more variety and possibilities than smaller operations though some of the material shown imho bordering on the tedious at times almost inventing crisis that need to be solved.

 

[Swimbar]

Well imho there are many factors to this:
(1) If you dont ask you dont get: ie someone at the Yorkshire Railway is undoubtedly driving grant etc applications.
(2) Yorkshire seems to be the flavour of the month: The Yorkshire Vet, The Yorkshire Auction House etc etc
(3) The levelling up agenda
(4) If you need to fill the can bigger operations offer more variety and possibilities than smaller operations though some of the material shown imho bordering on the tedious at times almost inventing crisis that need to be solved.

Many of the Programs featuring the Railway, and Yorkshire, are made for Channel 5 by Daisybeck Studios who are based in Leeds.
Two years ago this week the Railway was closed to the public to film Mission Impossible with Tom Cruise.
I can't imagine that there was no payment received for that.
Once it becomes known that you are welcoming to TV and film crews the work will keep coming.

 

[John Luxton]

Interested Video by the Welsh Highland Ffestiniog GM.

Interesting but somewhat one sided selling his point of view.

I am heading that direction for the FRS AGM - never bothered attending before. Wonder if there will be any questions about current services.

Money is short so why spend a lot on expensive headboards?

Tomorrow I am booked on a Woodland Wanderer (nothing to Blaenau) as a member (thus a freebie) and from the booking it is still covid compartments because of the way the booking system works.

Me in a compartment for 6!

Could be a normal service train where one ticket gets you one seat.

Seems to me like the economics of the mad house.

 

[paul1609]

Many of the Programs featuring the Railway, and Yorkshire, are made for Channel 5 by Daisybeck Studios who are based in Leeds.
Two years ago this week the Railway was closed to the public to film Mission Impossible with Tom Cruise.
I can't imagine that there was no payment received for that.
Once it becomes known that you are welcoming to TV and film crews the work will keep coming.

Think you will find that a feature film will pay very well, whereas a channel 5 documentary will be very low budget with little in the way of direct income and everything else is somewhere in between. My railway was chosen for the first episode of Downtown Abbey on the grounds that we had a photogenic overhead telegraph route!

 

[Titfield]

Many of the Programs featuring the Railway, and Yorkshire, are made for Channel 5 by Daisybeck Studios who are based in Leeds.
Two years ago this week the Railway was closed to the public to film Mission Impossible with Tom Cruise.
I can't imagine that there was no payment received for that.
Once it becomes known that you are welcoming to TV and film crews the work will keep coming.

I think it is more about location, location, location or to be more accurate proximity of the attraction to where the film or tv company is based.

The Bluebell does very well because london based tv and film crews can get there and back in a day (though it may be a long day) without the necessity to book accommodation, arrange transfers etc etc.

 

[Russel]

Tomorrow I am booked on a Woodland Wanderer (nothing to Blaenau) as a member (thus a freebie) and from the booking it is still covid compartments because of the way the booking system works.

Me in a compartment for 6!

Could be a normal service train where one ticket gets you one seat.

Seems to me like the economics of the mad house.

Prior to Covid, I used to visit the Ffestiniog at least once a year. I've now not visited since 2019, I won't be returning until I'm able to turn up at Blaenau Ffestiniog on the day and buy a single to Porthmadog, without having to pre-book or try to work out which service is running.

I've just had a quick glance over the Ffestiniog website, unless I'm missing something, all I can book until the end of June is 'The Woodland Wonderer' from Porthmadog to Tan-Y-Bwch at the rather shocking price of £27, I'd probably take my partner with me which would double the cost to £54, so, thanks, but no thanks.

For now, my money will be going elsewhere.

 

[Sm5]

It does rather amuse me that when levelling up is being talked about there are many parts of the south that actually could also benefit from some levelling up funds too.

Sutton got funding to add a siding, to a little used station 1 mile south of the main station, that has little purpose nor chance of much use.

Not only that it might even one day justify closure of part of the line beyond it, and the decision to site it where it was precludes reinstating a “plat2” at that station, despite the fact the ramp free access and the platform 2 both still exist, but unused in decades.

 

[paul1609]

Prior to Covid, I used to visit the Ffestiniog at least once a year. I've now not visited since 2019, I won't be returning until I'm able to turn up at Blaenau Ffestiniog on the day and buy a single to Porthmadog, without having to pre-book or try to work out which service is running.

I've just had a quick glance over the Ffestiniog website, unless I'm missing something, all I can book until the end of June is 'The Woodland Wonderer' from Porthmadog to Tan-Y-Bwch at the rather shocking price of £27, I'd probably take my partner with me which would double the cost to £54, so, thanks, but no thanks.

For now, my money will be going elsewhere.

The problem with statements like this is that the poster doesn't seem to understand that the heritage railway may be uncomfortable with the fact that the £27 is going elsewhere but the economic reality of 2023 is that it would be costing them say £35 to get the £27. So they have made the sensible decision not to provide for that market anymore.
This is the here and now reality, railways that don't adjust will go out of business. The ideal model varies from railway to railway but the fwhr have got it right for their circumstances IMHO.

 

[John Luxton]

The problem with statements like this is that the poster doesn't seem to understand that the heritage railway may be uncomfortable with the fact that the £27 is going elsewhere but the economic reality of 2023 is that it would be costing them say £35 to get the £27. So they have made the sensible decision not to provide for that market anymore.
This is the here and now reality, railways that don't adjust will go out of business. The ideal model varies from railway to railway but the fwhr have got it right for their circumstances IMHO.

And sooner of later HMRC are going to decide to change VAT on railways who offer Experiences rather than rail transport which will increase fares by 20%.

They have turned a blind eye so far but for much longer? I know someone who worked in tax and who is also a railway enthusiast.

They expect the issue will be picked up on sooner or later.

 

[paul1609]

And sooner of later HMRC are going to decide to change VAT on railways who offer Experiences rather than rail transport which will increase fares by 20%.

They have turned a blind eye so far but for much longer? I know someone who worked in tax and who is also a railway enthusiast.

They expect it will be picked up on sooner or later.

I think the way to end this nonsense is to get HMRC involved.

VAT is a complete red herring because most heritage railways could claim back more in input tax than they would be paying in Output tax.
Short of someone like the Dartmouth Railway I don't think there is a railway that could recover its operating costs from the farebox.
The only people to gain would be accountants charging fees to sort out the returns.

 

[Titfield]

And sooner of later HMRC are going to decide to change VAT on railways who offer Experiences rather than rail transport which will increase fares by 20%.

They have turned a blind eye so far but for much longer? I know someone who worked in tax and who is also a railway enthusiast.

They expect the issue will be picked up on sooner or later.

Inexplicably (to me) HMRC allows gift aid to be collected by heritage railways on what (to me) is actually transportation (and not admission to a charity site as per for example a National Trust property).

VAT is a complete red herring because most heritage railways could claim back more in input tax than they would be paying in Output tax.
Short of someone like the Dartmouth Railway I don't think there is a railway that could recover its operating costs from the farebox.
The only people to gain would be accountants charging fees to sort out the returns.

Heritage railways are fortunate if farebox revenue covers the direct operating costs alone. It takes donations, grants, legacies and income from retail and catering to "balance the books" and I use that term somewhat advisedly.

My fear is the gap to fill (between revenue and expenditure) grows ever wider and that the other sources (donations etc) will not totally fill the gap thus the inevitable will happen.

 

[paul1609]

Inexplicably (to me) HMRC allows gift aid to be collected by heritage railways on what (to me) is actually transportation (and not admission to a charity site as per for example a National Trust property).

Usually what you are buying is an annual platform ticket (ie admission to a charity) with a complimentary days travel thrown in. It's been discussed many times with HMRC and is strictly in accordance with their guidelines.

 

[Bletchleyite]

Inexplicably (to me) HMRC allows gift aid to be collected by heritage railways on what (to me) is actually transportation (and not admission to a charity site as per for example a National Trust property).

What's being bought in the majority of cases isn't transportation, the purpose isn't to go from A to B, it's an experience almost exactly analogous to a National Trust property or static museum, it just happens to move.

Almost nobody uses a heritage railway to actually go somewhere, the timetables often aren't set up to make it workable.

 

[John Luxton]

Well whatever happens in the VAT issue perhaps the HMRC should make a clear statement of whether "railway experiences" are VAT liable or not.

Unless they make a public ruling one way or the other no outcome can be assumed.

Given that I was informed of potential for VAT liability from someone with great experience in tax some of it in civil service I am inclined to believe them until a definitive answer is obtained.

Personally I would like experiences to be liable to VAT but normal transport remain excluded.

Perhaps those who prefer heritage lines to operate normal services rather than theme park experienced should bring this issue up with HMRC?

Anyway I am just waiting for my still Covid era experience to depart. It's like a time warp here at Porthmadog you would think it was still 2020 checking in at Gazebo and travelling in coaches with the plastic Covid screens in place still!

 

[Ken H]

Inexplicably (to me) HMRC allows gift aid to be collected by heritage railways on what (to me) is actually transportation (and not admission to a charity site as per for example a National Trust property).


Heritage railways are fortunate if farebox revenue covers the direct operating costs alone. It takes donations, grants, legacies and income from retail and catering to "balance the books" and I use that term somewhat advisedly.

My fear is the gap to fill (between revenue and expenditure) grows ever wider and that the other sources (donations etc) will not totally fill the gap thus the inevitable will happen.

Maybe the place to look to balance the books is to look at costs.
I have no idea where heritage railways spend money but there must be waste.

 

[Bletchleyite]

Are railtours VAT liable, and would a railtour run by a charitable organisation (were there any) be Gift Aidable?

The product heritage lines offer is basically the same thing but on their own infrastructure.

The answer probably lies there.

(I'd actually like to see registered charities wholly VAT exempt on their charitable activities, i.e. activities relating to their charitable purpose rather than commercial arms, but that isn't the case at the moment - Scouting for instance only manages to avoid it due to its federated structure where no individual charity tends to go over the turnover threshold).

 

[John Luxton]

Are railtours VAT liable, and would a railtour run by a charitable organisation (were there any) be Gift Aidable?

The product heritage lines offer is basically the same thing but on their own infrastructure.

The answer probably lies there.

(I'd actually like to see registered charities wholly VAT exempt on their charitable activities, i.e. activities relating to their charitable purpose rather than commercial arms, but that isn't the case at the moment - Scouting for instance only manages to avoid it due to its federated structure where no individual charity tends to go over the turnover threshold).

This is what Government web site says:

You cannot zero rate the transport of passengers:

• to, from or within a place of entertainment, recreation or amusement or a place of cultural, scientific, historical or similar interest, if you’re also the person supplying the right of admission to that place — see section 8

If a railway advertises a transport service even if passengers use it for recreation as they could the main network it would be exempt.

But reading the above and considering a heritage railway a place of entertainment etc then VAT could be liable as the site would be supplying the admission.

 

[paul1609]

This is what Government web site says:

You cannot zero rate the transport of passengers:

• to, from or within a place of entertainment, recreation or amusement or a place of cultural, scientific, historical or similar interest, if you’re also the person supplying the right of admission to that place — see section 8

If a railway advertises a transport service even if passengers use it for recreation as they could the main network it would be exempt.

But reading the above and considering a heritage railway a place of entertainment etc then VAT could be liable as the site would be supplying the admission.

The Heritage Railway Association members Web Site has guidance offered by HMRC as recently as 2022. I'm not at liberty to reproduce it here but basically the guidance suggests that a FWHR experience should be zero rated. A driver experience course on the other hand should pay the full Vat rate.