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Small firms face ‘extermination’ due to Network Rail asset sale


Thousands of businesses based in railway arches are facing rent hikes of up to 500%
George Grant with his father Ronnie, who started his business 60 years ago in Clapham’s railway arches.
George Grant (right) with his father Ronnie, who started his business 60 years ago in Clapham’s railway arches. Photograph: David Levene for the Guardian
Thousands of small businesses based in railway arches across the UK are facing “extermination” as Network Rail seeks to push through a billion-pound asset sale.
From bakers to bike shops, mechanics to restaurants, many of the 5,500 arches across the UK’s major cities are home to traders and shop owners.
But since announcing they would be selling their commercial property business, Network Rail has been accused of trying to strong-arm many of them out of their arches with threats of eviction if rent increases of between 300% and 500% are not met.
There are also fears about what will happen to the businesses when the sale goes through, with a number of private equity firms interested in acquiring the vast block of real estate.
An action group called Guardians of Arches has been set up in response and is being backed by Big Issue founder Lord John Bird.
George Grant, 56, who owns Clapham North MOT in London and co-founded the action group, said Network Rail told him his rent would be increased fivefold. He took on the business from his 93-year-old father Ronnie, a second world war D-day veteran who set it up in an arch 60 years ago.
“At the time Network Rail couldn’t get rid of the arches, they just wanted people to come in and look after them,” Grant said. “When my father moved in there were three light bulbs and that was it, so he set about renovating it and they said do what you want as long as you pay your rent.
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“They have absolutely never looked after us. We have built a business in those arches to serve the community.
“These businesses are the lifeblood of the communities of this country but Network Rail don’t understand this. They are basically exterminating the small business entrepreneurs in this country.
“With this sale of the assets nobody has been consulted. The government just said we are going to sell the arches. There was no consultation with the tenants or the general public. And the public don’t want their local businesses to be exterminated, because they use them.”
This story is being repeated across the country, leaving business owners facing an uncertain future.
Prakash Patel, who co-owns the Pop up Bikes cafe and repair shop in Manchester.
Prakash Patel, who co-owns the Pop up Bikes cafe and repair shop in Manchester. Photograph: Mark Waugh for the Guardian
Dipak Patel, 39, runs a cafe and repair shop called Popup Bikes in Manchester with his brother Prakash, but is facing the threat of having to pack up and leave if his three-month rolling lease ends.
He said: “It’s how big business works. It’s what they do, in search of profits the little guy gets shoved to the side.
“The important thing here is the public know this is going on and how it will affect them in the future. What will it leave them with in their cities and towns? What will happen if the nice independent coffee shop that used to be there will get replaced by a multinational chain?
“We are a hub for the community. Before we came in six years ago there were just smackheads hanging around. People couldn’t even park their cars here but now they can as the whole area has improved. But all that will go out the window if we are forced to leave.
“What we will end up with is a monoculture where there are no Popup Bikes, no great MOT places, just the same big chains everywhere. There will be no choice and we just have to buy the same stuff that everyone else buys.”
According to reports, there are said to be around 20 parties interested in the £1.2bn rail property arm, including private equity firms Terra Firma and Blackstone.
But Guardians of the Arches says momentum is starting to build and they have gained 3,500 signatures in just one week on a letter addressed to the transport secretary, Chris Grayling, which they plan to deliver to Downing Street this month.
Leni Jones, 38, whose husband Marcus established Rosso Corse, London’s only Ducati service centre, which is based in Bethnal Green, said they feel like they are being held to ransom by Network Rail.
Jones acts as a director of Guardians of Arches after being told Rosso Corse’s rent increase almost fourfold.
“We feel we are being held to ransom, they’ve given us zero time to relocate and they’ve removed all our security by taking away our security of tenure. And they own all the arches so they control the entire market,” she said.
“We’re not opposed to rent reviews, but what they are proposing is not comparable to what is charged locally. The business is our baby and what it represents to us is the culmination of my husband’s journey and all the love we’ve put into it.
“When we received the letter we felt very alone and so started talking to our neighbours to find out their situations and found out a number of the arches on our road are in the same situation, all given rent increases in excess of 300%, with the threat of eviction.
“This is where the concept came from, we shouldn’t be facing Network Rail alone, we should pool this knowledge and speak as a group. We’ll happily sit down and negotiate.”
Network Rail refused to comment on why certain tenants were facing rent increases of between 300% and 500% but said they aim to make rents competitive.
A spokesman said: “The sale of Network Rail’s arches will enable the company to raise funds to reinvest in much-needed railway projects to expand and improve the railway network for the benefits of millions of daily users.
“Rent reviews happen as tenancies expire, which can be as long as seven years. We benchmark against similar commercial premises in the local area and aim our rents at the lower end to make them competitive.
“Some areas have seen marked regeneration in recent years, which can lead to increased rents but we will always do our best to stagger any increase.”