Local councils are blocking the regeneration of our high streets

Local councils are making doing business in the UK a bureaucratic nightmare, says Preston Benson

I moved here from the United States over 20 years ago, became a British citizen, and spent my career investing in major British cities. I’ve learned that you can survive a pandemic, an energy crisis, multiple strikes, and inflation. But this will not be enough to sustain the business world if two problems are not resolved: lack of access to funding and the nightmare of oppressive bureaucracy. To me, this is the crux of the UK’s growth problem.

Across the country, businesses are often undercut by local governments that prioritize hidden agendas, such as internal subsidies for pet projects, over independent companies that create jobs.

A bureaucratic nightmare

A year ago, we lost a beloved venue, Catford Mews, to a shock eviction by Lewisham Council. Rather than working with us to reopen the site, the local authority has focused on teaching Universal Credit Classes to our talented team, who have all lost their jobs.

Or take the example of Peckham Levels. Although popular for many years, the program has always struggled as pre-launch conditions put in place by the council made the numbers unviable. Private money is expected to fund demands that defy commercial logic. When we took over at the end of 2021, we inherited a mess. Tenants refused to contribute to overhead costs, preferring to hide behind local councilors who repeatedly intervened. Rooftop renters are permitted to damage the premises directly, and our business is expected to pay the costs of repairs and cover any unavoidable rental refunds.

After three years of hard work, renovations to the premises were agreed with investors, but the council stepped in and offered to buy the business. They repeatedly delayed, nearly bankrupting me in the process, only to pull out at the last minute in favor of a new, fully subsidized operator. A 100 per cent privately funded venue is now a burden on Southwark taxpayers.

Valley of doom

Another obstacle is the availability of funding and affordable costs. For many companies experiencing rising revenues and in the “valley of doom” (turnover of £1–5m), the system is essentially broken.

The UK funding environment has a decent angel network to raise funds up to £500k, but it is starting to decline. In contrast to America, banks in the UK still require traditional collateral, and do not reflect that most modern businesses, especially in the hospitality sector, do not have assets.

In order to grow, entrepreneurs were forced to resort to highly punitive and unregulated “Wild West” options: cash loans from merchants and high-interest loans that burned working capital. Founders are routinely forced to sign Personal Guarantees, risking their family homes and personal savings. They face losing everything just to scale their business.

In a climate like this, when the state actively intervenes in private enterprise and the financial system demands entrepreneurs’ homes as collateral, why bother? Frankly, a founder is better off investing his time and capital in crypto. This is a far cry from ‘start-up Britain’ and cannot be considered a successful policy outcome.

Simple policy, big impact

We don’t need to tinker with pension fund reform. We need to unlock liquidity in mainstream banking. The government should instruct the British Business Bank to provide an upgrade guarantee. A simple policy shift and rethinking of bank underwriting restrictions post-2008 would allow mainstream banks to lend against the cash flow of operators who do not have viable assets.

Without these changes, the UK will remain a country where the risks faced by entrepreneurs far outweigh the benefits gained.

A system that punishes ambition is a system that guarantees stagnation.

Preston Benson is an entrepreneur and founder of motorways regeneration company, Really Local Group