Small Businesses in Railway Arches

Huw Merriman Excerpts

Wednesday 22nd March 2023 Commons Chamber

[The Minister of State, Department for Transport (Huw Merriman)]

It is a pleasure to serve under you in the Chair again, Madam Deputy Speaker, and I congratulate the hon. Member for Dulwich and West Norwood (Helen Hayes) on securing this debate on small businesses in railway arches. As she has said, small businesses are the lifeblood of the UK economy, providing jobs and driving innovation. I am pleased that the railway supports those businesses through high-quality accommodation in railway arches. In the hon. Member’s constituency alone, there are 300 arches in use by businesses, ranging—as she has mentioned—from mechanics to retail and food. I would just like to add that I am very sorry indeed that her constituents—the mechanics she mentioned—are not able to be here due to the timing of the debate. I am sure they will be able to watch and see that they have been well represented by the hon. Member, and I hope they will note my response with interest.

To help improve the state of the railway arches and fund improvements to the railway, Network Rail sold leases for many of its railway arches to the Arch Company Ltd —or Arch Co, as I will refer to it. As part of that sale, Network Rail sold over 5,000 properties on 150-year leases, generating over £1.4 billion, which was invested back into the railway. As the hon. Member for Dulwich and West Norwood has set out, running a business in a railway arch is not always plain sailing, and I am aware of some issues that have occurred in her constituency that Network Rail has engaged with her on.

While arches offer businesses access to affordable property in prime locations, they remain part of the railway. Network Rail will sometimes require access to undertake safety-critical maintenance work. Network Rail is aware of the need to balance the safe and efficient operation of the railway against the needs of Arch Co’s tenants. To help businesses remain trading, Network Rail tries to examine vacant arches, working closely with Arch Co to understand vacancies and planned refurbishment programmes. On occasion, access will be required to undertake safety-critical arch examinations in tenanted arches. Network Rail works with Arch Co and its tenants to undertake examinations at times that will be less disruptive to the individual businesses, including trying to work outside of business hours and working around tenants’ fixtures and fittings.

Since it acquired the leases, Arch Co has been engaged in what it calls Project 1000—its plan to invest £200 million to bring 1,000 empty and derelict spaces into use by 2030. Arch Co plans to create space for 1,000 businesses, supporting approximately 5,000 jobs in urban areas in England and Wales, including major works in London, Manchester and Leeds.

Network Rail has worked closely with Arch Co to agree standardised designs that streamline landlord consent processes and minimise risk to the railway. This has allowed Arch Co to accelerate its enhancement programme and support its tenants in the arches to evolve and meet current market demand. Network Rail prioritises the undertaking of arch examinations during the refurbishment process to minimise disruption and enable tenants to maximise trading periods between examinations.

I know that the hon. Member has campaigned for the protection of those owning businesses in the arches. Network Rail seeks to support businesses that are disrupted by its works. It will cover rent payments for the period of disruption and will look to return arches in an improved condition. Further support from Network Rail to cover additional costs incurred by tenants is considered on a case-by-case basis.

While Network Rail and Arch Co work hard to ensure that businesses can return to their arches, there are exceptional occasions when businesses may have to leave permanently. No tenants have been permanently removed from the arches since February 2019, and any tenant facing removal would be entitled to a statutory compensation element, depending on the terms of their lease. Where possible, Network Rail will work with Arch Co to identify suitable alternative accommodation within either Network Rail’s or Arch Co’s portfolio. To support effective business planning for tenants of arches, Network Rail access is subject to a minimum of either 60 business days’ or six months’ notice, dependent on the nature of the access. Network Rail and Arch Co try to give more than the minimum notice period, and the 12-month forward rolling plan for arch examinations and specific communications plans is much more the case for larger projects. In emergency circumstances, Network Rail has the right to immediate access where prior notification is not possible. Network Rail liaises with the businesses and Arch Co to keep them updated in such circumstances.

When Network Rail transferred its leases to Arch Co, rent arrangements, protections and notice periods were transferred unchanged. That included all provision for rent reviews, with any increases tied either to market level or the retail price index. Before and since the transfer of the arches to Arch Co, many neighbourhoods where railway arches are situated saw dramatic regeneration, increasing the value of properties. Even during this time, very large increases in rent have been an exception. I note the points made by the hon. Member, but with the arches having been transferred from Network Rail to Arch Co, some of the matters she has raised are a matter for Arch Co.

To support those whose leases were transferring, Network Rail and Arch Co worked with tenants to develop a tenants charter, which commits Arch Co to being an accessible and responsible landlord, providing environments to help its customers to thrive, working with its customers and creating positive social and economic impact. If the hon. Member feels that that tenants charter has not been accorded to, I will of course look at the requirements on Network Rail from that tenants charter to assist her and her constituents.

The hon. Member also referred to Atlantic Road. I have positive memories of the time I spent working in Brixton. I spent five years as a youth centre staff manager and trustee for two youth centres on Coldharbour Lane, and I used to walk past the arches that she talked about. I want to see for myself—not just for those reasons—the issues that she talked about on Atlantic Road. I would be pleased to join her in her constituency, meeting her constituents and business owners on Atlantic Road so that I can see and hear for myself.

In conclusion, I thank the hon. Member for securing this debate. It has raised a number of key issues that show how important it is that small businesses in the UK have access to safe, reliable and affordable premises. Railway arches represent an excellent opportunity for those businesses to get affordable premises in prime locations, and I hope I have demonstrated Network Rail’s commitment to work alongside tenants where access is required. I hope I can find out more when I join the hon. Member, if she will have me, in her constituency to see for myself.

Question put and agreed to.