Severn Valley heading for surplus – but greater challenges await in 2023
DESPITE difficult trading conditions, the Severn Valley Railway could be set to make a surplus this year – but 2023 could bring even greater financial challenges, said the line’s general manager Helen Smith.
In October, she issued a key statement regarding the railway’s finances, informing members and supporters about the challenges that lie ahead. Her intention was to reassure and explain the considerable work taking place behind the scenes to safeguard the railway’s future, explain the challenges ahead, and explain how this will affect future services for the next year. The statement was issued as the SVR enters its busiest period of the year with its lucrative Christmas period.
“After a great deal of very hard work to reduce costs this year and some success in increasing income in some areas, we have reforecast that the railway’s contribution (or surplus) should be slightly better than originally expected, depending on the success of our Christmas events,” said Helen. “However, we will still not be anything like past the challenges that the previous few years have brought. We are expecting 2023 to be even more challenging than this year has been.
‘Fast-changing’
“Naturally, the railway has been affected by recent events – Brexit, the Covid-19 pandemic, the Russian invasion of
Ukraine, the cost-of-living crisis, and soaring inflation – which have caused rapid rises in the cost of fuel, utility and supplies, and staff shortages. We have had to be as agile as possible, reviewing and replanning all aspects of the business, as we react to a fast-changing environment.
“Increased grants and donations, together with decreased expenditure, have enabled us to offset a decrease in budgeted income for 2022. Providing everything remains on course, we should be left with a modest surplus at the end of the year.
“This year we have seen a drop in visitor numbers and rising costs for staff, food, and supplies. Profit from food and beverage has dropped by 65% compared to what we expected at the start of the year. We have seen a drop of almost 22% in traffic numbers on normal operating days. We have had to absorb an extra £363,000 on top of what we had budgeted for utilities, coal, oil, water, and insurance.
“However, we have achieved a better-than-budgeted income from events. We brought in a Cultural Recovery Fund grant of £500,000 and the ring-fenced Roof and Crane donation of £475,000, which were both missing from the original budget as we didn’t know they were going to happen. We have saved considerable amounts on staff salaries and loco hire costs. We have plans to bring in more contract work to cover some engineering staff.
“Looking to our budgets for 2023, it is difficult to know what to plan. Everything is so uncertain with the cost-of-living crisis, and nationally visitor numbers are down by 30%.
“Let’s have a look at where the plans are now. Visitors are continuing to purchase on a ‘value for money’ basis; this is evident in the fact that event traffic has continued to be strong.
“A ‘value for money’ purchase is not a price- based decision but the purchaser’s perception of the value they’re getting for the money spent. Giving free 2023 tickets for all children coming to our Christmas events is a good example of how this works and will encourage whole families to come back.
“Events will be important to drive visitor numbers in 2023, and we will see the welcome return of the Step Back To The 1940s events, as well as other themed weekends.
‘Crucial’ volunteers
“Concerns over supply, cost, and quality of coal will continue. We cannot keep putting up entry prices, so the answer lies in having sustainable timetables, while maintaining steam working as far as possible.
“We will need more help than ever across the railway from our volunteers, so please respond to requests in the coming months. Your skills, dedication, and hard work will be crucial.
“We are still experiencing unprecedented and very tough times. The SVR is fortunate to have some of the most talented people in the heritage world working with us at every level of the organisation and I am confident that we will all pull together to get through this.
“Let’s enjoy the Christmas events and create some magical memories for our visitors.”