The article asserts that a model of ‘community’ was used by the UK’s New Labour government as a normative rationale for the regeneration and governance of designated urban spaces. The goal of this article is to offer a critical examination of the basis and application of this rationale, arguing that it inscribed aspects of social and urban policy with an anaemic meaning of ‘community’ which foreclosed the multiplicities, tensions and differences of the local. In particular, the article will argue that in seeking to empower ‘cohesive’ and ‘sustainable’ communities, policy circumscribed local voices and obscured the complex interplay that constitutes local life worlds. It will offer a grounded three‐part critical review of the depoliticized account of ‘community’ propagated by New Labour and argue for a more nuanced analysis of the neighbourhood as an unstable field of social exchange that problematizes attempts at ‘empowerment’ and neighbourhood management.