ARE WE OUR OWN WORST ENEMY?
Today’s preserved railways bear little resemblance to early schemes of the 1960s. How many of those currently operating will survive another 50 years? For many, the threat comes from within, says EVAN GREEN-HUGHES.
Today’s steam lines cover a pretty wide spectrum, from multi-million pound attractions employing lots of full-time staff right down to tiny all-volunteer railways with only a few hundred yards of track and a couple of engines and coaches. But almost all of them began with the same objective: to preserve or re-create something that otherwise would have been lost. Most, although not all, had the primary goal of providing somewhere where steam traction could be exhibited, and where old locomotives could be put through their paces. The bulk of them had been created by the end of the 1980s, 20 years after the end of BR main line steam, and most were started by people who are now either pensioners or have, unfortunately, departed from this world. Years ago, starting up your own steam railway was not as difficult as it is today. There were far fewer regulations in the 1960s and 1970s, while land (and thus rent) was much cheaper. Rolling stock was available at a fraction of today’s costs, and there was a plentiful supply of people, fresh from operating steam on the main lines, who were around to show us how it should be done. Most steam lines began with a search for a suitable site, often with the willing assistance of local authorities, many of whom had surplus railway land snapped up shortly after the Beeching closures. Whole railways could be bought fairly cheaply - the Worth Valley branch from Keighley to Oxenhope changed hands in 1966 for £45,000, with a total of 25 years to pay it off. Even taking inflation into account, at £750,000 in today’s money, it was still a good price. There were other terrific bargains. In 1960, the narrow gauge Ravenglass and Eskdale Railway was purchased from the Keswick Granite Company for the princely sum of £12,000 (around £250,000 today). This included not only the railway itself, but four stations, ten cottages, a café, two steam engines, three diesels and 33 coaches! Peppercorn rents for other sites were common, while industrial buildings commanded only a fraction of the rent that they would aspire to a couple of decades later. In other places, such as at Llangollen, the freehold was owned by the local authority and preservationists occupied the site by an agreement that didn’t involve much money changing hands.
STEAM AT BARGAIN PRICES
If you had the cash in your pocket, and were able to meet BR’s strict short payment deadlines and other rules, steam locomotives were available for around £3,000 each, and often much less. Many of them were in next to working order, so the demands on cash were nothing like as big as a comparable business might have been expected to face. Fundraising in those early days often consisted of nothing more complex than bottle banks, waste paper collections and subscriptions from an ever-growing membership. Once something was up and running, open days brought in literally thousands of people, all of whom seemed satisfied with a brief trundle up and down the track as a way of parting them from their money. Expansion was financed by more open days, and further expansion by higher fares, which continued to rise as the mileage grew. Preservation societies that took over existing lines were able to expand faster than those faced with re-laying ripped-up track, but all seemed to pursue the ideal of opening for more and more days each year. Those in holiday areas would try to open throughout the
summer holidays, while those in more urban locations, such as the East Lancashire Railway, would provide a weekend service, when there were more leisure travellers about. Those that initially promised to reinstate ‘proper’ passenger services soon gave up on the idea. An increasing number of opening days also meant an increasing amount of work, and this led to many lines taking on full-time staff, either to maintain the track or rolling stock or, in some cases, crew the trains themselves. However, as anyone who has ever employed staff knows, this placed a massive burden on the finances, which some railways answered by attempting to sell at least part of their staff’s labour in the form of contract engineering expertise. Subsequently, railways such as the Severn Valley and the South Devon have made a great success out of creating profit using directly-employed labour.
Margins too tight?
Over time, a model has evolved in which a railway runs over a piece of track, largely using steam engines and hauled stock, mostly financed by income from passengers taking pleasure trips. Margins can often be tight and, as a result, some railways have attempted to improve the bottom line with profits from catering and/or contract engineering. To generate much-needed cash, railways have (reluctantly in some cases) turned to the family market, noting that events such as ‘Thomas’ bring in a lot of money in a short space of time, while ‘Santa’ trains have always been a good winter earner. Big enthusiast galas have also provided a lot of income, enabling some of the more urgent bills to get paid. Very few lines produce healthy cash surpluses, but most seem to at least wash their faces. Against this background, steam railway members clamour for more and more track to operate on and projects of this nature gain management approval almost without question. Many railways embark on extensions without any clear idea of how they are to be financed and what, if any, the benefits are likely to be - a situation that is the complete opposite of what happens in the commercial and business world. Members also press for this or that pet project to go ahead, even if it not necessarily relevant to the current operation, and this brings with it the prospect of ‘cost drift’, in which the original budgets for a scheme are often handsomely exceeded, leaving the railway to pick up the tab. Many railways still follow this business model, even though the costs of running a railway are rising at an alarming rate, largely because our stock is getting much older. Meanwhile, the public’s ability to pay is being compromised by low inflation - a circumstance that will inevitably put a squeeze on that important profit margin. In addition, the public’s expectations are rising at a time of static prices and increased competition for their money. A good example is those hoping to reinvigorate the Weardale Railway with the introduction of steam traction, which will have to compete with the recently-opened £31m Kynren project in Bishop Auckland. How can vintage steam trains trundling through the countryside compete with a jawdropping 21st century technology show of pyrotechnics, lighting and water effects on a stage encompassing seven and a half acres, using over 1,000 cast and crew?
Fares rising out of reach
The wisdom of building extensions is questionable. In his 2002 report The Finance and Economics of Railway Preservation, economist Bob Scarlett suggested that the optimum length for a preserved railway was around 7½ miles. After that, the revenue per mile that could be
obtained from customers’ pockets declined considerably, while running costs rose in proportion to the mileage, and in some cases considerably more where it was necessary to run a second train to keep a reasonable interval timetable. Currently, the Keighley & Worth Valley, at 4½ miles, charges £11 for a return trip (£1.22 per mile carried). The Llangollen Railway, at ten miles, costs £15 (£0.75 per mile) while the West Somerset, at 20 miles, costs £19 for a rover ticket (£0.43/mile if only one journey is taken). These figures would seem to support this theory, unless of course building an extension massively increases the number of people visiting. Traditionally, increased costs have been offset by rises in fares, but steam railway fares have been rising faster than inflation, and there is now evidence to suggest that the general public is baulking at some of the prices being asked. For example, in 2002 the East Lancashire Railway charged £6 for a return ride from Bury to Rawtenstall, which, adjusted for inflation, should now be £9 but is actually £11.30. The KWVR, which charged the same then, now charges £11. As costs keep rising this may no longer be a viable option, because a ticket costing £30 to £40 no longer falls in the ‘casual purchase’ category for a young family. The principle of extending and expanding also brings with it the danger of grant job trap syndrome, in which capital is injected into a scheme by public bodies on the basis that jobs will be created. In most cases, the grant money is quickly used up on construction, leaving the railway with the overheads of the staff that the scheme required to be employed, further reducing those slender margins that we talked about earlier. An extreme example of this was the Weardale Railway in its original incarnation, which received millions of pounds in capital grants and ended up employing 40-plus staff. It went bust within a short space of time as a result. Of course, other railways have sailed close to the wind financially in the past, but thankfully recovered. Among these are the Swanage and the Mid-Hants which both had close scrapes around 20 years ago, but have since recovered to become major players. There are some others whose financial health is questionable and, no doubt there will be others in years to come.
Moving up a gEar
Some railways have already moved on from the traditional preservation model. The Ffestiniog/Welsh Highland Railway in North Wales now provides an experience that bears little resemblance to that of the genuine steam era. It has pursued a policy of going up-market both in its rolling stock and in its stations and facilities, such as catering, and now sells a product that is truly fit for the aspirations of the 21st century consumer. The Swanage Railway has invested heavily in becoming a genuine transport provider, first with its park-and-ride service from Norden, and now with its main line connection to Wareham, which will bring in people who otherwise wouldn’t bother with a preserved railway. Meanwhile, the Weardale Railway now makes its money by providing a theme-park ride version of the traditional Christmas train but based on a Hollywood movie, and which grosses more than many railways make in a whole year. Some railways have been successful in expanding their businesses by hosting main line registered stock, the Midland Railway - Butterley being one site that offers parking and maintenance facilities while others, such as Barrow Hill Roundhouse, are now primarily places where diesel traction can be restored and maintained. In the future, there may be
Expectations are rising at a time of static prices and increased competition for people’s money
Many steam railways are not generating enough cash to do anything but deliver more of the same
more opportunities to come from linking our lines with the national network. The recently replaced Transport Minister Claire Perry felt that there was great potential in this idea, and even touted the possibility of redundant trains being offered at low lease rates for suitable proposals. One thing that all these schemes seem to have in common is that they are targeting a different market to that normally attracted by our steam lines. It is this additional custom that may well be the key to the future success - or failure - of any project. All businesses must adapt, and some would argue that they must expand to survive. However, many steam railways are not generating enough cash to enable them to do anything but deliver more of the same, and they may be entering a slow downward spiral that might one day threaten their very existence. Well-managed railways already have five and ten-year plans in place that will guide them through this difficult period. Those railways will have boards, managers, staff and volunteers who will be young enough to care about what happens in a decade’s time, and they will have sought expert advice to help them navigate the legislation. As in any business, those who are prepared will succeed. Unfortunately, there are others who have no clear plan for the future. They are the ones who may fall victim to one or more of the factors that we have been discussing over the last few months. The traditional steam railway model does not leave much room for error, and any substantial change in outside or internal circumstances could lead to the prediction that I mentioned at the start of this series, and which was made at a Heritage Railway Association meeting: of ten failures becoming a reality. Fortunately the steam railway movement has proved resilient in the past and hopefully will continue to be so in the future, but perhaps we should all ask ourselves the question - is our very own railway prepared for the challenges ahead?