Small businesses based in railway arches generate over £275m in revenue every year, new research has shown.

The study, which was published by UK-based think tank the New Economics Foundation, contributes to an ongoing debate over Network Rail’s decision to sell off its railway arches in a bid to tackle its debts.

The British infrastructure manager recently announced plans to sell 4,455 arches, which are worth over £1bn, to a single private developer, but is facing criticism from campaign groups including The Guardians of the Arches and the East End Trades Guild.

These groups fear the sale of the arches would affect the small businesses renting them, which range from bakeries to garages, gyms and music studios.

According to the New Economics Foundation, an average company in an arch contributes about £160,000 to the UK’s economic output every year, with vehicle sales businesses thought to generate about £200m a year alone.

New Economics Foundation member and leader of the research Sarah Arnold said:  “There are loads of enterprising small businesses based in railway arches all over the country. And when you add up all of the ways in which they contribute to the economy – not just their own activities but the local supply chains they create – it amounts to a lot.

“But all of that dynamism is under threat. Every day we speak to small business owners who have had to shut down or relocate because of massive in-year rent increases, often leaving arches vacant for years. And now, with the impending sale of the estate, their future is even more uncertain. When you look at how much these arches businesses contribute to our economy, it doesn’t make any sense to put all of that at risk.”

As small businesses continue to struggle with Network Rail’s rent increases, The Guardians of the Arches has now urged the government to intervene and protect their interests. In response, Downing Street said it will consider proposals from the companies that could help to limit potential damages.

Network Rail has denied the existence of a link between the sale and rent increases and said that all tenant leases will be transferred to the new owner. The four remaining bidders in the deal are CK Asset Holdings, Terra Firma, Kildare Partners and a tie-up between Blackstone and Telereal. An agreement is expected to be reached by the end of the year.