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The austerity years have hit independent shops hard, as difficult economic conditions to reduce the government’s budget deficits continue. However, small businesses are becoming a powerful force for change in Britain’s communities.

The last decade has not been kind to Britain’s Small and Medium-sized enterprises (SMEs) as they’ve seen costs rise and profits shrink alongside family budgets.

While one in ten local shops have been lost during this period, the survivors are quietly pulling together to improve and sometimes save their communities by paying directly out of their own profits, according to AXA’s latest retail study.

Eight in ten participate in community projects with other shop owners to improve their local streets and amenity failures.

More than half of retailers surveyed said that their local shopping district is in decline due to under-investment, whilst 51% actively lobby the local council for improvements to local infrastructure.

One in five are on a committee that organises community events aimed at attracting outsiders to their area, including D-Day celebrations, Christmas markets and even children’s book readings, and where lobbying fails, a significant 28% say they have joined with other shop owners and invested their own profits into improvements.

This comes on top of the average £8,000-£9,000 a year such shops already pay in business rates.

Darrell Sansom, managing director, AXA Business Insurance said: “Britain’s small shops have been squeezed, and we are seeing closures, particularly in rural areas. Our study shows the flip-side of this picture though.

“Through the years of crisis and austerity, these little shops have pulled together and formed powerful local networks that are proving extremely durable and effective in getting things done.”

AXA estimates that local shop communities organise over 110,000 community events each year, the equivalent of two for every UK town and village. They have got parking bans lifted in 43,200 streets, and 24,000 streets repaved; maintained 51,000 urban green spaces and act as 90,000 fundraisers for UK charities, as well as making 32,000 regular donations of food and goods to help society’s poorest.

Eight in ten small retailers say they ensure their shop reflects their local area’s history and character. In rural locations, this brings important economic benefits as 72% of village shops provide retail space for local craftsmen, artists and food producers.

Thirty per cent say their shop attracts tourists to their village too. Consequently, the pace of closure of village stores, 300 a year, represents a pending crisis in Britain’s countryside.

At the sharp end, those located in Britain’s inner cities provide an informal support network for homeless people. A quarter say they provide help directly to those sleeping rough in their locality. Likewise, a quarter have hired someone previously living long-term on benefits, and 15% former prisoners looking for a second chance.

Mr Sansom added: “In the poorest areas of the country, shop owners truly see themselves as engaged in the daily struggle together with their customers. And across the country local shops are the glue that holds communities together and help people feel a sense of local identity and pride.”

The study also suggests that local shops are a lifeline for Britain’s growing elderly population, both financially and socially. A third of independent shop owners said that local pensioners would struggle to find an alternative if they closed, as one London sandwich seller commented: “One old lady relies on me if she doesn’t get her benefits. I give her discounts and I bought her a coat when it turned cold”.