The UK government has pledged £210m to regenerate high streets by taking boarded-up shops, pubs and clubs and turning them into shared workspaces, cafes and community hubs.

Andy Burnham said the funds would “help put power back into the hands of locals who know their area best” as part of his effort to “restore pride and bring hope back”.

High streets continue to struggle, despite multiple government attempts at regeneration, after a shift to online shopping and services such as banking and estate agents, as well as higher business costs including taxes, energy and labour.

The cost of living crunch has also prompted people to rein in spending on non-essentials and driven a shift to dining and drinking at home instead of spending on eating out.

Burnham said it was important to find ways of reviving high streets despite the challenges.

“People don’t measure growth by looking at a spreadsheet,” he said. “They measure it by looking at their local high street. Are shops opening or are the shutters down? Does the place feel like it’s moving forward or being left behind?

“The truth is that too many high streets have been left to hollow out, leaving town centres a shell of what they once were. That must change, and today’s funding will help put power back into the hands of locals who know their area best.

“That’s how we restore pride and bring hope back. Not by telling people things are getting better, but by giving them the power to see and feel the difference where they live.”

A new £125m derelict buildings fund will support local councils to revamp vacant shopping centres, disused cinemas and other abandoned buildings into locally needed spaces such as community halls and health centres.

A further £65m will help communities in England rescue and revamp buildings and businesses at risk of closure, such as pubs and clubs.

Another £20m will be equally split between funding co-operative ownership of businesses important to communities such as pubs and clubs and funding council high street rental auctions to fill properties left vacant for a year or more.

The decision directs existing funds already earmarked for high street regeneration towards community-led schemes. It is in addition to the existing £5.8bn pride-in-place programme that is handing 284 deprived communities up to £2m a year for 10 years towards local regeneration projects.

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The government is to announce later this year a full high streets strategy aimed at improving town centres across England.

Research by the University of Southampton found people feel high streets have declined more than any other part of their local area over the past decade as household chains, from BHS to Debenhams, have collapsed while shoplifting has increased.

Rose Marley, the chief executive of trade body Co-operatives UK, said the new specialist fund to back the creation of mutuals was “a game changer”.

Labour pledged to double the number of co-operatives in the UK but its figures showed the number rose by just 0.4% last year to 8,005. Amid difficult times in the hospitality sector, co-operative pubs are on the rise – up 48% in the last five years – but they remain a tiny fraction of the industry with just 377 pubs and other hospitality businesses in the UK at present.

However, Marley said: “This funding shows a government that understands how giving power and agency to communities brings positive change and improves lives, with community, business and local government all working together.”