Network Rail 'ignored' tenants in £1.4bn railway arch sell off, audit report reveals
PUBLISHED: 14:00 02 May 2019 | UPDATED: 14:10 02 May 2019
Small businesses in railway arches fighting rent rises of up to 350pc were "ignored" when Network Rail first put the properties up for sale.
The tenants were only considered “late in the process”, the National Audit Office spending watchdog has concluded.
Traders who launched their 'Guardians of the Arches' campaign at Bethnal Green a year ago which spread nationwide have today warned that firms could still be forced to close, with the audit report confirming that the £1.4billion sell-off was on the basis of rent increases in the coming years.
“This is exactly what tenants fear the most,” Guardians of the Arches director Leni Jones told the East London Advertiser. “We were ignored until we made that impossible through our campaign.
“This report confirms that tenants' interests were only considered during the sale process because we forced Network Rail and the government to listen.
“We are the backbone of our communities bringing variety and vitality to urban neighbourhoods. Big rent increases will kill that vitality stone dead.”
The nationwide protest was sparked last summer in Bethnal Green when motor workshops and other traders along Bancroft Road and Dunbridge Street were facing rent rises up to 350 per cent. Some had already been forced to close.
The campaign spread to 4,000 business across London, then around the country as the 'Guardians' protest movement went viral.
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Tower Hamlets Mayor John Biggs backed the traders on a walkabout of the Bancroft Road arches and joined their lobby to the Transport Secretary.
Today's Audit Office report concludes that Network Rail's sell-off was “value for money”, but adds: “It is of some concern that the impact on tenants was not an explicit sale objective.”
The Audit Office chief Amyas Morse said: “It is concerning that tenants did not form part of the aims of the sale and that they were only fully considered late in the process.”
Network Rail suggested buyers could expect a 54pc rise in rent over the next four years.
The new owners, Blackstone Group and Telereal Trillium, have adopted a charter for their dealings with tenants and have taken on existing lease agreements, with contract obligations unchanged.
Mayor Biggs wrote to the new owners in November stating that the 600 railway arch businesses in the East End were worried by Network Rail's rent increases. He called for the rises, some as much as 350pc, to be reviewed and stated: “These businesses are a community asset and the lifeblood of our local economy.”
The rights of all tenants have been protected and all current agreements fully honoured, the Department of Transport insists. A charter commits the new owner “to engage with tenants and long-standing small businesses to resolve financial pressures”.
But there has been controversy over the arches long before February's £1.4bn sell-off.
Motor traders in Bethnal Green railed against Network Rail plans to evict them back in 2015, first reported in the East London Advertiser. They handed a 1,000-name petition to the town hall to stop the evictions along Malcolm Place, under the Liverpool Street main-line, led by tyre trader Mohammed Monnan.
Network Rail claimed at the time that its proposals would “improve the condition and commercial attractiveness of the arches”. But the motor-trade feared the evictions would mean job losses.