Based on a new poll of municipal councils, UK councils are preparing to sell community centers, athletic facilities, and retail spaces as they rely on a fire sale of assets to stabilize finances.
Increasing Fiscal Challenges Prompt Asset Sales
The Key Cities Group for second-tier cities in the UK stated that six out of ten of local authorities are planning to sell assets to cover the rising costs of social services for vulnerable individuals.
Councils have in the past faced criticism for disposing of public land and land to support their budgets, but they contend they must continue to generate essential revenue from property disposals or declare themselves bankrupt.
This coalition noted that a high proportion of authorities seeking to raise money from a fire sale of assets marked “a distinct shift from 2024, when the largest share (six in ten) of municipal officials said they would focus on restructuring services and using savings to manage growing financial challenges.”
Specific Examples of Planned Disposals
Medway Council in Kent announced its property management strategy featured the disposal of a shopping centre in Rainham and a community venue in another town to raise £20m over five years.
- A local golf course and commercial properties owned in two English counties, which all generate rent for Medway council, will also be disposed of under the plan.
Council Tax Increases and Wider Financial Pressures
This research of local authorities in the coalition, which covers Sunderland, Southampton, Gloucester and Salford, also found that over seven in ten of authorities will have to increase council taxes next April to address the rising cost of essential services, higher levels of homelessness, and a persistent housing shortage.
Medway council said it will press ahead with property disposals after steep rises in the cost of youth support, special educational needs and disability (Send) provision, adult social care, and short-term housing.
“We are taking creative strategies but certain measures take time to deliver both improved services and cost efficiency,” said Vince Maple.
He continued: “We face population challenges which will continue to add to the strains we have. As a unitary authority, we had a drastic reduction in our revenue support grant from 2010-24, which is extremely difficult.”
Countrywide Trends and Forecasts
A survey of county councils recently further found council budgets being stretched by the increasing figures of young people and older individuals needing Send support.
The County Councils Network said that council deficits will hit £4.4bn a year by the end of the decade, as they grapple to manage increased demand.
Government officials have delayed scheduled changes to the special educational needs framework until next year after a white paper outlining those reforms was recently delayed.
Disadvantage and Funding Gaps
Based on the latest indices of deprivation (the Index of Multiple Deprivation) covering English councils, many participating urban areas were among the most disadvantaged in England.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the most deprived 30 across the country under the latest IMD measures,” noted the study.
“Although only a single urban area is among the ten most deprived for deprived neighbourhoods nationally, cities are much more prone to be in the most deprived fifth of the nation. The data underscores the extent of difficulties confronting local leaders across major urban centers in the next twelve months,” the analysis concluded.
“Local government leaders have been clear about the necessity for a fair and sustainable financial structure that accounts for and addresses the actual extent of deprivation and need,” said a council leader.
“Without this, local authorities will continue to face impossible choices around which essential services to fund, and which to reduce, to the disadvantage of their residents.”
One in five of councils have cut or compromised social care provision in the past 12 months, the study found.
