Based on a new study of municipal councils, UK councils are planning to sell social clubs, sports centres, and retail spaces as they rely on a fire sale of assets to stabilize finances.
Increasing Fiscal Pressures Drive Asset Sales
The Key Cities Group representing major urban areas in England stated that six out of ten of councils are planning to dispose of properties to cover the rising costs of adult and children’s social care.
Councils have previously come under fire for disposing of playing fields and open spaces to support their finances, but they contend they must proceed to generate essential revenue from asset sales or declare themselves bankrupt.
The group noted that a significant number of authorities seeking to generate funds from a fire sale of assets represented “a distinct shift from 2024, when the majority (60%) of local leaders stated they would focus on service redesigns and utilising savings to manage increasing fiscal pressures.”
Specific Examples of Planned Sales
Medway Council in Kent said its property management strategy featured the sale of a retail complex in a local town and a community venue in Rochester to generate £20m over the next half-decade.
- A local golf course and commercial properties held in Worcestershire and Suffolk, which all provide rental income for the authority, will additionally be disposed of under the strategy.
Local Levy Rises and Broader Fiscal Strains
This research of local authorities in the coalition, which covers Sunderland, Southampton, Gloucester and Salford, also found that more than 70% of authorities will have to raise council taxes next April to address the rising cost of essential services, higher levels of housing insecurity, and a persistent housing shortage.
Medway council explained it will press ahead with property disposals after steep rises in the cost of youth support, special educational needs and disability (Send) provision, elderly and disability services, and temporary accommodation.
“We are taking innovative approaches but some of these require time to deliver both better provisions and cost efficiency,” said Vince Maple.
He added: “There are demographic pressures which will continue to add to the strains we have. As a unitary authority, we had a 91% cut in our revenue support grant from over the past decade, which is extremely difficult.”
Countrywide Patterns and Projections
Research of county councils recently further found local finances being stretched by the growing number of children and adults requiring special educational assistance.
A network of councils projected that council deficits will reach £4.4bn a year by 2029, as they grapple to manage rising needs.
Government officials have delayed scheduled changes to the special educational needs framework until next year after a white paper setting out those changes was recently delayed.
Disadvantage and Funding Shortfalls
Based on the latest indices of deprivation (IMD) for English councils, many key cities members were included in the most disadvantaged in England.
- “Member cities like several major towns place in the most deprived 30 across the country under the latest deprivation indices,” said the report.
“While only a single urban area is in the ten most deprived for deprived neighbourhoods countrywide, cities are much more prone to be in the worst-off 20% of England. The figures underscores the extent of difficulties facing local leaders across key cities in the next twelve months,” the analysis concluded.
“Council officials have been explicit about the necessity for a equitable and lasting funding system that accounts for and responds to the real levels of deprivation and demand,” stated Michael Mordey.
“Without this, local authorities will persist to face impossible choices around which vital provisions to allocate spend to, and which to cut, to the detriment of their communities.”
A fifth of local authorities have cut or compromised social care provision in the past 12 months, the survey revealed.
