Where next for heritage railways?

Now more than ever, the Heritage Railway Association is at the centre of the sector after a tumultuous period for railway preservation. Its chief executive STEVE OATES shares his thoughts on what the next five years are likely to hold.

January marks five years since the first Covid-19 cases in Europe. It’s been an unbelievably tough five-year period for heritage rail, with forced closures, battles for reopening, massively increased financial pressures, huge alterations in customer behaviours and big changes in our workforce… and the coal issue. It’s been incredibly painful, but it is also now history.

The real challenge for us as a sector, and for the Heritage Railway Association particularly, is to work out how we learn from these last five years, but then park it and move on to the next five. What are the trends we can discern from everything going on around us? And how on earth do we focus on giving heritage rail as a whole, and railways individually, the best chance of coming out of the next five years in a strong position?

People power

I’m making no apologies for starting with thoughts on people. I’ve said it before and I’ll say it again – it isn’t the trains that make heritage rail, it’s the people. And we’re seeing some significant ‘people’ trends that are, in reality, driven heavily by external factors over which we little control.

Volunteering and heritage rail are almost inextricably linked. From that first day in 1951 when Tom Rolt and his rapidly expanding band started to nurse the Talyllyn Railway back to health, volunteers have been the lifeblood of our movement. And I still think volunteers will always have a heavy role to play in our sector.

But the world of work has changed enormously since the 1950s, and the world of volunteering has been impacted by that too. It’s a sad fact of the ‘always on’ world many of us now inhabit that free time is much reduced. The number of us with ‘nine-to-five’ jobs is probably smaller now than it’s ever been and the cost-of-living crisis has meant that many more people are having to find ways to top up their main income to get by, or to avoid spending on things like volunteering!

There are also wider societal changes that are impacting people’s ability to volunteer. If you wind the clock back a couple of decades, starting a family in your twenties was the done thing. Today it’s far more common for that to happen in your thirties or even early forties… if at all. Whether that’s down to the cost of housing, childcare, or whatever, the impact on heritage rail is obvious. Those people who were in their thirties, forties or fifties with a bit of free time when their kids had sufficiently grown up aren’t really there anymore.

Throughout the 1990s and 2000s we also saw an increasing number of people who were able to take advantage of their pension situation to retire early (and relatively comfortably). Again, for the most part those days are either over or rapidly heading that way. Retirement age has risen and there’s no suggestion it won’t rise again. The chances are that people in their thirties or forties now will be working into their seventies.

All of this means that heritage railways are often employing more people to do work once carried out by volunteers. Heritage railways do not do so out of ideology, but simply out of necessity. The Autumn budget did very little to help in that respect though. Through a combination of minimum wage increases and changes to employers’ National Insurance contributions the cost of employing staff has gone up significantly. I’m aware of railways where the annual increase in costs will run into hundreds of thousands of pounds, at a time when it’s very tough to afford.

I don’t think the sector is against improving pay, conditions and quality of life for our staff or the millions of other people who will undoubtedly benefit from the minimum wage increases. Far from it. Our concern is more that this has all been done in one go, at speed, with very little opportunity to prepare. So, at a time when our volunteer workers (or potential workers) are under pressure like never before, our ability to support them with additional paid staff is also heavily limited too.

Heritage rail has little chance of fighting against these factors; it’s going to have to adapt to them. But it’s an area I’ve seen cause repeated friction within heritage railways. I do think there needs to be a wider acceptance that no railway management can be expected to swim against this level of societal change.

The upshot is that I expect the heritage rail workforce – paid and volunteer as a whole – to look slightly smaller in five years’ time – with a caveat. Sharing of resources between railways is already starting to happen in some shape or form with the Vale of Rheidol and Brecon Mountain Railway collaboration being the most well-known example. My expectation is that this trend will be replicated… there is, after all, a long-tradition of Welsh narrow gauge lines leading the way.

I also expect to see new support businesses serving the sector. In much the same way as it is now common practice to outsource significant locomotive restorations or overhauls, I expect it to be more common to see tasks where it’s becoming increasingly difficult to find suitably qualified staff, to also get outsourced. It’s already happening with some IT, ticketing, financial management and business support functions all being outsourced – and I expect this to increase considerably in future years, allowing all sorts of specialist heritage rail expertise to be utilised by a number of organisations. If you don’t believe me, then take note of how a small number of event management companies are now working with railways to deliver some pretty impressive results. It might be that although the direct workforce of individual heritage railways could be slightly smaller, the overall heritage rail workforce remains more static.

I’m not going to duck out of addressing equality and diversity issues here. I’m not for one second suggesting we need to take our eye off the ball when it comes to gender, sexuality or any of the other protected characteristics – there are still massive issues and lost opportunities – but let’s also throw something new into the mix. I think that, potentially, the other great equality and diversity risk across the whole of the volunteer-driven sector is actually financial exclusion. As a young person or someone who is out of work, if you can’t call upon the financial support of your parents to get into volunteering, then it’s going to be incredibly tough. If you don’t live on the doorstep of a heritage railway, travelling there is likely to be outside of your means. If you don’t have access to basics like boots and overalls that most heritage railways still expect their volunteers to provide, then that’s a massive obstacle too.

Going forward, we need to think carefully about financial exclusion and its place in shaping our workforce, and perhaps look at how we as a sector can tackle some of those barriers.

Finances first

This leads us seamlessly onto the tricky subject of money. For as long as anyone can remember, heritage rail has, by and large, been leading a hand-to-mouth existence. I well remember 20 years ago when my home line, the Isle of Wight Steam Railway, was perilously close to going bust, so I have huge sympathy with any organisation that finds itself in such a position.

But few heritage railway organisations are much less than 30 years old now, many are closer to 50 or 60. That should bring with it a level of maturity and stability. Too often, it doesn’t.

Every heritage railway manager, director and trustee needs to understand that their most important non-safety duty is to ensure the financial sustainability of their railway. Doing that in the face of countless pressures is not easy. Our stakeholders might be determined that every last penny of surplus goes into a new extension, station, or locomotive. But that should be only after a sensible and realistic level of reserves are maintained.

I don’t want to hark back to the pandemic all the time, but if such a fate was ever to befall the nation again it seems very unlikely that the level of support available then, would be forthcoming again. If we’re unlucky enough to go through another pandemic, or perhaps even a major climate event, we’re very likely to be on our own.

Building a sensible reserve is the only responsible solution. Just as local authorities and other organisations of their ilk regularly carry a reserve for things that its not viable to insure against on the market, heritage railways are going to have to be ready to plough that lonely furrow.

What would such a reserve look like? Certainly enough to cover core costs for six months of completely lost turnover… it might be that 12 would be more prudent. If your railway isn’t in the position to put aside the kind of money required to build that reserve over a reasonable period, then you need to be asking some very serious questions about how to change that.

Some railways deserve full credit for realising this already. The Severn Valley, for example, may have come close to the brink in the immediate aftermath of the pandemic, but now they’re working well towards a stability and a resilience that many would, no doubt, envy. It’s not just the ‘big’ railways that have made this move though – I know of much shorter, less high-profile railways that are running with reserves sufficient to cover 18 months of no trains because that’s what they decided they needed to prioritise.

If I was going to make both a prediction and an aspiration, it would be that the second half of the 2020s will need to be remembered for a focus on building up reserves and financial maturity. That’s not as exciting as a wave of extensions or new steam locomotives, but it needs to be OK to talk about our finances with our internal stakeholders and with our friends and colleagues in the sector.

We shouldn’t be afraid to tell our volunteers what our current surplus is, and what we’re aiming for to secure the long-term future.

If that is to happen, then it will also inevitably be combined with a fresh look at governance. So many of our railways are still operating today with governance arrangements they set up in their formative years. What might have been considered good practice for a small voluntary organisation in the 1970s is a long way from what is now good practice for a multi-million pound business in the visitor economy. I really do believe that if railways are going to thrive as we head towards the end of the first quarter of the 21st Century they’ll need to embrace a slicker, more results-focused structure. It shouldn’t take months to make decisions. The world moves far too fast for that now.

Talking business

There’s certainly going to be no shortage of decisions to make. The speed of change to the world in which heritage railways do business has been incessant over the last five years. I’m pretty sure we’d all love a spot of stability to catch our breath. But there’s no sign that’s coming.

Those changes to minimum wage and National Insurance are only the latest shock to the system, and they won’t be the last. Right now, I can think of a long list of potential next shocks that the HRA is actively focusing on, ranging from counterterrorism legislation to a permanent ban on domestic coal mining.

The overall economic picture doesn’t look like it’s going to be kind to us in the medium term yet either. Although wage growth should help our potential customers feel like they have more money in their pockets to spend on a day out with a steam train, inflation is not going away. The cost of the consumables and fuels we need to run a railway are still going up and probably slightly faster than the overall headline inflation figures we see. I’ll hedge my bets slightly and say that I think we need to expect a flat economy for the foreseeable… much as we have in the last couple of years.

I don’t think any of these issues currently have the potential to threaten the existence of heritage rail on their own – but in combination and on top of the struggle already being faced, it might not look so good.

Although the HRA will always be looking for ways that we can act on behalf of the whole sector to minimise the impact of changes through our advocacy work, the reality is that, for many of the changes that face all businesses rather than specifically heritage rail, the only option will probably be to increase income. That always sounds easy in theory, but what about in practice, at a time when most people don’t feel flush with cash?

I think a large part of the answer is to look again at what we do as a sector and how we can stand out in a crowded marketplace. Thankfully, I think very few heritage railways now see their competition as other heritage railways. That’s a big shift compared to only a few years ago. Now there’s pretty universal understanding that the competition is other types of leisure activity.

Question number one for anyone in the position of trying to grow their income must be ‘are we more entertaining than binge-watching the latest Netflix offering?’ If you’re not, then tempting people out of the house is more difficult than ever before. There is still a market that will pay for ‘just a train ride’, but it’s a diminishing one and it is not one that will comfortably take premium pricing unless you’re lucky enough to have something like a popular seaside resort on tap.

With a very small number of exceptions, simply extending the railway to offer a longer train ride is unlikely to lead to higher margins. That’s not going to be a popular view, but it’s one that can be backed up by lots of railways that have had the experience of completing an extension. And it’s unlikely that simply doing ‘more’ is going to produce the desired outcome either. Running more trains as a unilateral act is unlikely to lead to greater returns. Again, evidence from others would suggest that actually trimming the number of operating days has a smaller than proportionate impact upon overall visitor numbers over a month or year.

I’m a firm believer that the only true solution to increasing margins is by both diversifying and increasing the quality of the offer in some way, shape or form.

The big trend in recent years, at least in the family market, is undoubtedly the ‘character’ visit. They’re a way to tap into an existing brand with reach and appeal, then bring it to your railway. I can’t knock anyone who’s gone down that route if it’s bringing in the visitors and attracting new younger audiences to heritage rail. It’s quite clearly a route that has advantages if you’re resource-poor as they seem to work without the additional staffing and operating pressures that something like a gala might do. Fads in children’s entertainment can change quickly though, so keeping ahead of the game is always going to be part of the job.

Using heritage railways as an events ‘venue’ like that is not exactly new in concept but it’s still one that’s clearly got growth potential. Again, just look at what the specialist events companies are doing for several railways.

I can hear lots of purists right now talking about dumbing down and ‘Disneyfication’ (although Walt Disney himself was, ironically, a huge rail fan) so there are of course other options.

Can you develop the most accurate Victorian railway day out? Or an authentic rural railway experience? Or even a 1960s re-creation? It’s very clearly a marketable concept, but it requires a level of commitment to the cause – prioritising the most authentic rolling stock rather than the easiest, for example, or ensuring staff dress to the correct period. But what about the ‘normal day’? How do you market and grow the run-of-the-mill running day? Firstly, let’s not talk about ‘normal’ or ‘runof-the-mill’, or the tendency can be to only make things special when there’s something extra going on. Thinking about how we want every visitor to feel when they walk in to a railway, while they’re at that railway and when they leave should certainly help ensure we make every day ‘special’.

Either way, the further key to success is going to be marketing. I suspect that over the next few years more and more railways will be looking for marketing expertise. If you don’t already have someone with a strong and up-to-date marketing or PR background on your board then it’s time to think about where you’re going to find it from. You need someone who can tell everyone why your railway is special in one sentence, video clip, and social media post.

And you need to do that because lots of other competing visitor attractions have already done it.

Friends in high places

In some respects, we’re a very lucky sector. Steam trains are exciting, they still regularly set the scene for TV dramas and Hollywood blockbusters, and some pretty well-known figures are out-and-out fans of what we do. The problem is that we’ve only ever really harnessed that power in a piecemeal fashion.

I can foresee a period coming up where heritage rail is going to have to win some substantial PR battles. Using coal as an example as it stands, nobody of note is saying that we shouldn’t be using coal in our steam locomotives. Quite the opposite in fact as, so far, we’ve been able to ensure that legislation aimed at other users of coal has not had unintended consequences for steam. But the battle is getting ever harder as so many people now only associate coal with electricity production.

Whether we like it or not, this country fundamentally works on a basis of who you know, rather than what you know. We can point out repeatedly that not all coal is the same, that most of what comes out of the chimney is harmless water vapour, and that actually the biggest way to reduce heritage rail pollution would be to get fewer of our visitors to arrive by internal combustion engine car. But we need advocates in the right places to highlight that too.

Whether it’s coal or other issues threatening heritage railways, one of the biggest things we must change in the years ahead is to harness that support, build those friendships and use those advocates. Whether that’s TV personalities or Westminster politicians, we need people who will speak up for heritage rail – and steam in particular.

We must also get better at presenting a unified front on these issues. Yes, we all know that there are innumerable nuances on most issues, but the audiences that matter here aren’t going to – or even need to – understand that at the outset. As a sector, we need to keep it simple, speaking clearly and concisely with one voice.

Managing change

One word I’ve used repeatedly here is change. But managing change is not easy. In fact, managing change is at the root of a good proportion of the most difficult and long-standing problems in heritage rail that we’re aware of.

I’ve left my strongest prediction for last – as this one is more of a certainty than a prediction really: Change is going to be the toughest part of the next five years for heritage rail. We’re going to be hit with changing demographics, changing economics and a changing political landscape all at the same time.

It’s been a number of years now since Dr Robin Coombes first spoke up at an HRA conference and predicted that the sector would need thousands of new directors, trustees and managers in a short period of time to survive. They aren’t just extra bodies on boards and trusts either – they need to be people of the right calibre. The days of appointing people as directors or trustees based on how long they’ve been at the railway, rather than what their knowledge and experience is, should be long gone. Some of those new people with relevant skills and experience have been found – but by no means all. It could, of course, be a lot easier if structures were changed. If your railway has a trust, a company, a society, a ‘friends’ group or maybe even more, then it’s time to ask if that’s really the most appropriate governance structure. If you’re struggling to find enough competent people to fill positions, why do you need to make it worse by needing three times as many? Could one board not fulfil all of these roles?

I know that for decades heritage railways have slowly evolved their way of doing things, with modest change often by circumstance rather by design. If we continue at that pace we’re going to be left behind. Left facing an ever-increasing battle for visitors, volunteers and funding. Worryingly, there are still boards that don’t accept this inevitability and organisations that still see new ideas as tantamount to blasphemy.

I understand completely that the attraction of railway preservation is just that, preserving not just the steam locomotives themselves but also something of the way of life.

Unfortunately, if we try to keep hold of things like the governance structures of 40 or 50 years ago, we’ll fail in our key aims of preserving a railway.

The whole sector needs to get better at managing change. That means recognising the challenges and bringing people with you; understanding that most people do fear change… even more so if they don’t fully understand it. For too many people in our sector the default response to any change is still ‘No’. I’m not saying we should abandon scrutiny of change – far from it – but perhaps the default stance should be shifted to ‘how will it make things better?’

That’s not made any easier of course by the general national discourse of anger and division. Anyone who takes even a quick glance at social media will see how that plays out in reality – and heritage railways are for from immune to it. All we can really do is be aware of it, and be aware that much online comment will be heavily skewed from the decisions you make! After all, people who disagree with something (regardless of what their reasoning is) are far more likely to speak up than those who agree.

Faced with all of that it’s undeniably tempting to avoid the tough decisions, but it can be overcome. The key to it all is being open, honest, transparent and forthcoming with information. Don’t just send an email, talk to people face-to-face. Don’t just send a letter, record a video and share it with your volunteers and stakeholders. Don’t present a fait accompli, ask others for their views and opinions at the earliest possible opportunity. It’s not impossible, it can be done. And you can bet that other competing visitor attractions in your area are currently making similar changes quicker and more simply than a heritage railway.

Let’s not beat around the bush, everyone in heritage rail needs to get comfortable with change, and we all need to understand how to make it less painful for everyone involved.

Conclusion

It’s unlikely that the next five years are going to be easy for heritage rail. But we can choose to make the years easier by gearing up our organisations to be more nimble in business decisions, more stable financially and better prepared for the inevitable changes.

For decades, senior people in this sector have been predicting that ‘the bubble will burst’. I don’t see that at all. But what I do see is a series of individual threats that will impact upon each and every heritage railway differently. If there is an overarching threat, it is that the sector doesn’t adapt quickly enough to them.

This year sees Railway 200 – a series of celebrations focused upon the milestone opening of the Stockton and Darlington Railway in 1825. In five years’ time we should all be talking about the 200th anniversary of the Rainhill Trials on the Liverpool and Manchester Railway.

If we’re all open to change and strong in our governance decisions, then I see no reason why everyone celebrating in 2025 won’t be doing the same in 2030.