Railway arch sell-off threatens thousands of small businesses
Arches tenants enrich our cities and must be saved
01 June 2018
Railway arches will mean different things to different people. Some will remember the local garage where they’ve got their MOT done for decades. Others will think of a bakery or café that’s recently set up shop in an arch and which they’ve come to love. Or if they’re Londoners of a certain age, perhaps they might dimly remember a night out in King’s Cross.
Businesses in railway arches are a largely urban thing, so perhaps they cannot quite lay claim to being universally treasured. But within the city, they come close. Arches are places where a huge variety of people and enterprises are given a bit of space to grow, to interact, or just to exist. They are a home for furniture restorers, metalshop workers, café owners, hairdressers, tyre sellers, specialist food stores, artists, gyms, motorbike repair shops and everything in between. These businesses in turn bring all sorts to the arches, so people from very different walks of life can cross paths. In short, railway arches are the essence of what is good about living in a city.
And by the end of this summer, they may all have been sold off.
Network Rail – whose 5,500 railway arches around the country make it the UK’s largest landowner for small businesses – is short of cash. Back in 2015 they struck a bargain with the then chancellor George Osborne: give us the funds we need for infrastructure upgrades, and we’ll sell off a big chunk of our assets. The railway arches are one of those assets.
The arches’ value has been marketed at over £1bn. You can guess the sort of firm sniffing around this kind of deal: Blackstone, Goldman Sachs and Terra Firma are all thought to be lining up bids.
For the tenants of the Network Rail arches, this sell-off is a serious threat. Many of them say they have already faced the prospect of massive and extraordinary in-year rent rises of as much as 350%. These small businesses suspect that the valuation of the portfolio is based on future rental yield, so it doesn’t matter to Network Rail if they can’t pay and have to close down. And then what will the new owner ask of them? They can be forgiven for assuming the likes of Goldman Sachs may not have their interests at heart.
But this isn’t a done deal. A committed group of arches tenants from around the country has come together under the banner Guardians of the Arches to oppose the sale and seek a viable settlement for the future. Supported by the New Economics Foundation and the East End Trades Guild, they are organising an open letter to Chris Grayling asking him to halt the sale and meet them to talk about the future of the arches. Thousands have signed this letter in just the first few days, and the group are planning a lobby of parliamentarians in June.
In social terms, it could be disastrous. There is a human cost to this kind of transaction which cannot be ignored.
Every political party claims to be on the side of small businesses, and for good reason. Now, the Government has a chance to show they mean it. They could either find a way to support and sustain a network of thousands of small businesses giving vitality and economic dynamism to local communities all over the country. Or they could throw these entrepreneurs to the wolves of global capital for the sake of a one-off bump in the public finances.
Like many public asset sales, it makes little sense no matter how you look at it. In financial terms, selling off the asset means Network Rail – and by extension the public – will no longer benefit from the steady annual rental yields generated by the portfolio. And it’s no excuse to say there’s no other way of funding infrastructure improvements. The Government is currently able to borrow at historically low interest rates, but instead they are forcing public bodies to sell income-generating assets to fund investment.
And in social terms, it could be disastrous. There is a human cost to this kind of transaction which cannot be ignored. George Grant’s 92-year-old dad has been running a business out of an arch in Clapham, London, for the last 60 years. Since the middle of the last century he ran a cab firm, then a general garage, and finally a specialist MOT provider, all the while responding to his customers’ needs. Of course rents went up in that time, but always at a reasonable rate. Then at the end of last year, Network Rail demanded over four times as much rent than he had paid previously. George told me his dad turned to him and said: “I can’t do this any more. I give up.”
But George isn’t giving up. He and the Guardians of the Arches have just a few months to stop this sale. For those who claim they love small businesses, now is the time to stand up and be counted.
Campaigns Save our railway arches
Topics Local economies
