The role of restructuring in reviving local economies

A key part of Andy Burnham’s agenda as the UK’s newest prime minister is the devolution of power towards local areas and away from Westminster. He appears to be tapping into a concern that many communities feel disconnected from economic growth and from the decisions that shape their town centres.

It’s little surprise that so many people feel this way. Although the UK remains a comparatively wealthy country by international standards, stagnant productivity has led to GDP per capita falling behind the US and some of our European neighbours, meaning lower average incomes, stagnating living standards, and people feeling poorer.

This is reflected in the state of high streets across the country. The level of distress in the retail sector remains high, with vacant units left by the loss of local shops, pubs and churches, adding to the disillusion and reflecting a wider feeling of decline. 

Meanwhile, local businesses continue to be saddled with rising labour costs, a complex business rates system, and the cost of legacy or under-performing store portfolios, often on inflexible leases. 

It’s a complex issue and there’s no one solution. However, across the country, there are examples of reimagined local town centres that are thriving, having put community spaces, culture and hospitality at their heart. Those include Altrincham and Stockport, regarded by many as regeneration blueprints.

Although not easy, it shows what can be achieved when businesses and local policymakers – who are set to be handed increased powers under Burnham’s plans – work together effectively. The restructuring and insolvency sector has a role to play here too.

Restructuring and insolvency is often associated with business failure and closure. But the rescue of a business can protect jobs, maintain supplier relationships, allow commercial activity to continue, and preserve economic value. 

That matters for places as well as individual businesses. Town centres frequently contain vacant retail units, ageing commercial properties, and sites that are no longer aligned with changing consumer demands. Where those assets are held by, or transferred to, organisations with the ability and appetite to invest in them, there is an opportunity to unlock new uses, support entrepreneurship and help restore local economic activity.

Restructuring will not, on its own, solve the problem of left behind places. But it should be part of the regeneration toolkit. By bringing together financial, legal and commercial solutions, restructuring can help resolve obstacles that might otherwise prevent businesses and assets from being rescued, repurposed or put back to productive use.  

If the next phase of regeneration is to be more local, practical and place-based, then the focus should not only be on new investment, but on making better use of what is already there. And who is better placed than local professionals to help with local issues?

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