Government and Network Rail admit not engaging properly with arches tenants during sale in grilling by Meg Hillier

Arches traders outside Parliament after the meeting on Tuesday.

Arches traders outside Parliament after the meeting on Tuesday. - Credit: Archant

The government and Network Rail have admitted not engaging properly with tenants during the mass sale of 4,500 railway arches last year.

Hackney South and Shoreditch MP Meg Hillier grilled Department for Transport chief Nick Joyce and Jeremy Westlake, chief financial officer of Network Rail, in her role as chair of the Public Accounts Committee this week.

It follows a National Audit Office report that found traders were only offered support in the "final stages" of the £1.46billion sale to Telereal Trillium and Blackstone Property Partners.

The Guardians of the Arches, which formed in London Fields early in 2017 to fight rent hikes and grew into a national campaign group, won the support of the Labour party in its bid to first block the sale and then guarantee tenants' rights such as favourable leases and security of tenure.

The NAO found the new owners' pledges to support the tenants were not legally binding and that support for the thousands of businesses - car garages, breweries, cafes, carpentry warehouses, printers - only came late on, after the Guardians held meetings with transport minister Jo Johnson.

And when asked why that was the case by Ms Hillier, Mr Joyce replied: "We do believe that the protections in the arrangements that were put in place in the leases protect the tenants and the position they hold in those arches, but in terms of that strength of feeling and the engagement with them, I would accept we could have done more."

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Mr Joyce went on to say the DfT weren't aware there were problems until late in the process because its understood Network Rail had been engaging with tenants.

Mr Westlake acknowledged the rail firm's engagement had been "sub-optimal" but defended the communication with tenants in general while it owned the arches.

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Ms Hillier had a different take, telling him: "I love your trust in the teams who were out there doing this, because we have heard—certainly in my constituency and particularly around London Fields, where I have hosted a number of meetings about this - about contract work being paid for but not carried out, poor-quality assessment of work done and poor maintenance of the arches.

"There was quite a litany of problems, and one can only hope that the new owner will do better—I don't think, in some instances, they could do much worse."

Before the sale they, Ms Hillier and Hackney mayor Phil Glanville had called for small parcels of arches to be sold to stakeholders in communities rather than selling the whole portfolio to the highest bidder.

Mr Joyce and Mr Westlake confirmed that was ruled out in favour of attracting the biggest investors.

When quizzed on why rents were being driven up before the sale, in some cases by 300 per cent in London Fields, Mr Westlake denied bosses would get bonuses for increasing rents but said "they would certainly be encouraged to ensure that we are getting the market rent."

After the meeting, Ms Hillier said: "Although the sale went well technically and plugged a funding gap, it has highlighted a continuous theme on how large organisations and the government do not consider the impact on wider stakeholders when selling assets."

"In Hackney, the sale has had a direct impact on small businesses thriving underneath the arches of Hackney's rail lines. It's important we hold the new owners to their promises."

The Guardians of the Arches group is fundraising so it can hold the landlord and government to account as it secures rights through a tenants' charter.

It has one day left to go and is some way off hitting its £80,000 target. To donate, click here.

The Gazette has been covering the Guardians of the Arches campaign since attending the meeting where the group was launched. For all our coverage on the campaign, click here.

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