Over the past year, we have worked alongside five Community-led High Street Innovators to understand the reality of community-led high street regeneration. As set out in our New High Street Playbook: Community-Led Innovation in Action, these community businesses demonstrate that without the right conditions, even the most determined community-led initiatives struggle to take root.
In previous blogs we’ve highlighted the structural barriers around communities gaining access to high street and town centre space on fair terms, and on community businesses’ ability to participate in decision-making about the shape of their high street.
But what about the financial barriers that community businesses on the high street face? Access to finance and funding – the money that underpins any businesses’ ability to put their plans into action – is crucial to enabling a mixed-use civic high street.
What we’ve learnt alongside our Innovators is that the challenge to community-led regeneration is not simply that there is too little money, but that the design of funding and the ability to access appropriate finance at each step of a community business’ journey is not sufficient. Additionally, where public investment exists, its design is often mismatched with the conditions on the ground. Or investment only improves a private asset without creating long-term public benefit.
Community businesses need a national pathway that supports them from activation of their high street to long-term stewardship. This consistent pathway must link together revenue funding, pre-development support, access to capital, and patient finance.
Assembling complex finance in a fragmented system
The Arcade Group in Dewsbury has required a complex and fragmented patchwork of funding to bring the town’s Grade II listed Victorian shopping arcade back into use.
They secured a National Lottery Heritage Fund grant of £4.5 million for the capital costs of renovating the building. The Group also used their legal structure as a Community Benefit Society to raise community shares to the value of £195,000 to fund their own running costs until the Arcade can generate income through rental of its 16 units.
The Group has also sourced funding from eight other sources to cover increased costs of renovating of the Arcade, which has been delayed by the complexity of the work. During this time, the Arcade Group have realised that they must take on a wider role to revitalise the town centre if the project is going to be made a success. But this extension to their role is currently unfunded.
Their ongoing funding is fragile, with the Arcade Manager post covered for two days a week by the tenants’ service charge. This is sufficient for running the Arcade itself, but does not take into account the work required to bring life back into the town centre, which has suffered a 50% decline in footfall over the last twenty years.
Whilst The Arcade Group have worked successfully to attract the funding needed to save the Arcade and bring it up to modern standards, there is a funding gap in their ability to play a larger role in the town centre which is repeated in many places where community businesses are leading asset-based regeneration: the local context cannot sustain high rents to pay for additional regeneration efforts, and other funding is scarce.
In Dewsbury’s context The Arcade Group are working with the local Pride in Place Neighbourhood Board, but this funding is flowing in the most part to large capital projects, and when it flows to the Arcade Group it is to deliver specific events. While this is valuable activity, is does not enable the Arcade Group to work strategically across the town centre.
When public money leaks out of the high street
When public money is available for high street regeneration, either from central or local government, it is often poorly matched with the conditions on the ground.
Make CIC worked with their local council to plan a High Street Rental Auction, for which support funding was available from central government. However, the timeline and the design of the central government funding made it inaccessible to Wirral Council, who were not able to commission external consultants, as the funding required, and could not move at pace to meet the timeline. The design of the funding, combined with stretched capacity within the council, meant that Birkenhead missed out on the opportunity to bring vacant high street space back into use.
Wirral Council has been able to make public money available for shopfront renewal in Birkenhead through the UK Shared Prosperity Fund. Unfortunately, this type of investment does not always translate into direct community benefit. At least one private landlord in Birkenhead raised the rent after council funding improved the exterior of the shop. It is hard to see how this public funding has secured long-term public benefit.
While all levels of government are aiming to bring long-term renewal to our high streets and town centres it’s crucial that public funding is designed with close attention to how it can be deployed locally and how it can lock in long-term public benefit.
Mixed-use schemes are still designed for bigger players
Working at scale intensifies the challenges of a funding system that is not aligned with the needs of community-led regeneration.
Over the past decade, Southmead Development Trust has worked with their community to co-create a regeneration masterplan for their neighbourhood. Together, they’ve committed to developing a mixed-use scheme that pairs 177 new homes with an extension of their high street, which will provide new community enterprise space, the delivery of public services, and improved public realm.
This is exactly the type of model often called for in debates about the future of high streets, combining a range of uses for high street space, and meeting the particular needs of the people that live in Southmead. However, Southmead Development Trust have found that the system is not designed to work with community businesses or to prioritise place-making or the involvement of the community. Instead, it focuses on larger players.
Access to finance for this project has required partnering with a Registered Housing Provider so the development can access national subsidy for building homes for social rent. Negotiations with a series of Registered Housing Providers have required compromise on the proportion of the housing that will be community-owned. Southmead Development Trust have also had to extend their expertise far past the normal role of a Development Trust to negotiate the rules around VAT, which incentivise commercial letting of ground floor space, rather than the community building, owning and using this space themselves. Many of the interactions with the current finance system have threatened to reduce the ambition of the scheme and its benefit to the community.
Southmead Development Trust have stayed the course, stewarding the community’s ambitions for their place for over a decade. They anticipate the development starting on site in 2026. However, if we’re to see communities taking the initiative in regenerating their high streets and designing schemes which foreground community ownership and reduce the extraction of profits, we need finance systems that can operate at neighbourhood level, rather than solely focusing on large-scale projects.
What this means for making community-led regeneration financially achievable
These three stories from our Innovators show that our current finance system is ill-equipped to support community-led regeneration at a range of scales. We recommend that central government and funders seek to understand the pathway of community-led regeneration in order to make appropriate finance available at the right time.
Small changes, such as including some revenue funding alongside capital funds for renovating high street assets, would do much to support community businesses establishing themselves on the high street and bringing the community’s voice into conversations about high street renewal.
A bigger shift would be to map the pathway of community-led regeneration from pop-up use of space through meanwhile and social value leases, and finally to community ownership. Community businesses have different finance needs at each step along this pathway. The provision of financial products suited to each stage would allow for greater strategic planning, and faster timelines from the identification of high street space through to occupancy and activation.
Additionally, with sight of the community-led high street regeneration pathway, local councils can bring value such as bill subsidy and use of existing powers such as high street rental auctions and compulsory purchase orders. Institutions such as Homes England should also consider their role in enabling community-led regeneration alongside developments by bigger players.
By taking a closer look at what the finance system incentivises, and what it frustrates, it’s possible to see how it can be realigned to create a civic high street.
