According to a new study of municipal councils, UK councils are planning to offload social clubs, sports centres, and retail spaces as they rely on a rapid disposal of assets to balance the books.
Increasing Fiscal Pressures Drive Asset Sales
The Key Cities Group representing second-tier cities in England reported that six out of ten of local authorities are planning to sell assets to cover the rising costs of social services for vulnerable individuals.
Local governments have previously come under fire for disposing of public land and open spaces to shore up their budgets, but they argue they must continue to generate essential revenue from property disposals or declare themselves bankrupt.
The group said that a high proportion of authorities attempting to generate funds from a fire sale of assets marked “a distinct shift from 2024, when the largest share (60%) of local leaders stated they would prioritise restructuring services and utilising financial reserves to weather increasing fiscal pressures.”
Specific Cases of Planned Sales
One local authority in Kent said its asset disposal plan featured the sale of a shopping centre in Rainham and a community venue in Rochester to generate 20 million pounds over the next half-decade.
- Gillingham golf club and business parks held in two English counties, which all provide rental income for the authority, will additionally be disposed of under the strategy.
Council Tax Increases and Broader Fiscal Pressures
The survey of councils in the key cities group, which includes Sunderland, Southampton, Gloucester and Salford, further found that over seven in ten of councils will have to increase council taxes next April to address the rising cost of essential services, higher levels of homelessness, and a longstanding accommodation deficit.
Medway council said it will proceed with asset sales after steep rises in the cost of children services, special educational needs and disability (Send) provision, elderly and disability services, and temporary accommodation.
“We are adopting creative strategies but some of these take time to deliver both better provisions and financial savings,” stated a council leader.
He added: “There are demographic pressures which will continue to add to the pressures we have. As a unitary authority, we had a 91% cut in our central funding from over the past decade, which is extremely difficult.”
National Trends and Forecasts
A survey of regional authorities this week also found council budgets being strained by the increasing figures of young people and older individuals needing Send support.
The County Councils Network said that local shortfalls will reach 4.4 billion pounds a year by the end of the decade, as they grapple to cope with rising needs.
Ministers have delayed scheduled changes to the special educational needs framework until next year after a policy document outlining those reforms has been postponed.
Deprivation and Financial Shortfalls
According to the latest indices of deprivation (the Index of Multiple Deprivation) covering English councils, many participating urban areas were among the most deprived in England.
- “Participating urban centers like several major towns rank in the most deprived 30 across the country under the latest IMD measures,” said the study.
“While only one key city is in the ten most deprived for deprived neighbourhoods nationally, cities are far more likely to be in the most deprived fifth of England. The data highlights the extent of difficulties facing local leaders across major urban centers in the coming year,” the report added.
“Local government leaders have been explicit about the need for a equitable and lasting financial structure that reflects and responds to the real levels of deprivation and demand,” said Michael Mordey.
“Lacking this, councils will continue to face difficult decisions around which vital provisions to allocate spend to, and which to reduce, to the disadvantage of their communities.”
One in five of councils have cut or compromised social care provision in the past 12 months, the survey found.
