Based on a recent study of municipal councils, UK councils are planning to offload social clubs, sports centres, and shopping arcades as they bet on a fire sale of properties to balance the books.
Increasing Fiscal Challenges Prompt Asset Sales
The Key Cities Group for major urban areas in England stated that six out of ten of local authorities are intending to sell assets to meet the rising costs of adult and children’s social care.
Councils have in the past come under fire for disposing of playing fields and open spaces to shore up their finances, but they contend they must proceed to generate essential revenue from asset sales or declare themselves bankrupt.
This coalition noted that a significant number of councils seeking to generate funds from a quick sale of holdings marked “a clear change from 2024, when the largest share (60%) of local leaders stated they would focus on service redesigns and utilising savings to weather growing financial challenges.”
Specific Examples of Proposed Sales
Medway Council in southeast England announced its asset disposal plan included the disposal of a retail complex in Rainham and a social club in Rochester to generate 20 million pounds over five years.
- Gillingham golf club and business parks owned in two English counties, which all generate rent for the authority, will also be disposed of under the strategy.
Local Levy Increases and Broader Financial Pressures
This research of councils in the key cities group, which covers Sunderland, Southampton, Gloucester and Salford, also found that over seven in ten of authorities will have to raise council taxes next spring to address the rising cost of essential services, increased rates of housing insecurity, and a longstanding accommodation deficit.
The authority said it will press ahead with property disposals after sharp increases in the cost of youth support, support for vulnerable learners, adult social care, and temporary accommodation.
“We are adopting innovative approaches but some of these require time to deliver both better provisions and financial savings,” said a council leader.
He continued: “There are demographic pressures which will continue to increase the strains we have. As a unitary authority, we had a 91% cut in our central funding from over the past decade, which is very challenging.”
Countrywide Trends and Projections
A survey of regional authorities this week also found council budgets being strained by the growing number of young people and older individuals requiring special educational assistance.
The County Councils Network projected that local shortfalls will reach £4.4bn a year by the end of the decade, as they grapple to manage increased demand.
Ministers have put off planned reforms to the Send system until next year after a policy document outlining those changes was recently delayed.
Disadvantage and Funding Shortfalls
Based on the most recent deprivation measures (IMD) for English councils, several key cities members were included in the most disadvantaged in England.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton rank in the top 30 nationally under the latest IMD measures,” noted the study.
“While only one key city is in the ten most deprived for disadvantaged communities nationally, cities are much more prone to be in the most deprived fifth of the nation. The data underscores the extent of challenges confronting local leaders across major urban centers in the coming year,” the analysis concluded.
“Local government leaders have been clear about the necessity for a equitable and lasting funding system that accounts for and responds to the actual extent of deprivation and demand,” said a council leader.
“Without this, councils will continue to face difficult decisions around which vital provisions to fund, and which to reduce, to the disadvantage of their communities.”
One in five of councils have cut or compromised care services in the last year, the study found.
