Going back to the early years of the current decade South Tyneside was not unusual in suffering cuts in its central government funding. But the area is among the hardest hit despite being one of the most in need because of its high levels of post-industrial unemployment with its associated social problems.

Once world famous for its shipbuilding – a quarter of the word's ships were built here at one time – this corner of the north east of England has suffered a reduction of more than half its government funding. It is not the first time the area has suffered in this way. Jarrow, one of the towns making up the council area, was the starting point of the famous crusade against unemployment in the 1930s.

A string of community centres have provided some facilities to offset rising social needs in recent times. But as leader of South Tyneside Council leader Iain Malcolm told LocalGov, these were not funded by the Government and with dwindling resources it was becoming impossible to keep them open.

Many councils would have thrown in the towel and shut the centres. But Cllr Malcolm had other plans. He had been in discussions over ideas with their roots in the co-operative movement about handing over control of the facilities to the community.

The first exercise in 'community asset transfer' was carried out in Cllr Malcolm's own ward. A community centre which was falling into disrepair was demolished and a new building also incorporating the doctor's surgery next door was erected with funding from the NHS and a specialist charity. Now the Marsden Health & Wellbeing Centre offers health and housing services, sports facilities and community meeting spaces including doctors and dentists surgeries, a gym, sports hall and rooms to hire.

Others followed and soon all the community centres in the council area will be run by the community – volunteers keen to keep them open and get the best out of them. Branch libraries were also handed over to management teams wanting to save them from closure. One now provides a home for an award-winning community-run boxing club – Bilton Hall Amateur Boxing Association – that helps keep young people on the right tracks in an area of South Shields with particularly high unemployment.

Another centre was taken over by a local rugby club which enabled it to focus on the sport while at the same time offering facilities to the community.

When he first put forward the idea of community management, Cllr Malcolm recalls, the centres were closed during school holidays – because that was when council staff took their leave. Now they are open when the local community needs them.

However, a fundamental question is likely to arise when the idea of residents taking over their local community centre: 'why should we volunteer to run it?'

Cllr Malcolm's answer is very clear. 'We quickly found that when you transfer these assets the community really takes charge,' he says. 'They genuinely take ownership and want to make them the best they can be. Residents have really been empowered by this process. It's transformed them from rather down-at-heel places managed by the council to really lively facilities run by the community, providing them with what they want, when they want it.'

The management groups do not literally take ownership. The community centres and other facilities are still owned by the council, which continues to provide expert training and oversees the way they are being run. 'They are still our assets so it is in our interests to make sure they are well looked after and providing the kind of services we would wish them to,' Cllr Malcolm explains.

When an asset transfer is proposed, the existing group running a centre is asked to produce a business plan to assess whether it can be run without council funding, within strict criteria. If this appears impossible the project is put out to tender for other groups to bid.

An important spin-off benefit of transferring assets to the community is it gives them the power, as independent organisations, to apply for grants from external organisations to help run them. Again, this is in the council's interests. One centre has recently been awarded £427,000 from the National Lottery to build a dedicated youth hut.

South Tyneside's innovative approach has been recognised more widely. It was recently presented with the Co-operative of the Year Award thanks to its commitment to co-operative principles in the face of deep funding cuts.

Cllr Malcolm is clearly proud of the strategy's success. 'We've seen real community empowerment,' he says. 'The community is working in partnership with the council and other partners. It means they can provide what the local people want not what the council thinks they should have. It's been a really important strategy for us to protect the resources and enable communities to run them in the way that works best for them.'