Based on a recent survey of local authorities, UK councils are planning to sell community centers, sports centres, and retail spaces as they rely on a fire sale of assets to balance the books.
Growing Fiscal Pressures Drive Asset Sales
The Key Cities Group representing second-tier cities in England reported that 60% of councils are intending to dispose of properties to meet the rising costs of social services for vulnerable individuals.
Local governments have in the past come under fire for disposing of public land and open spaces to support their finances, but they contend they must proceed to raise vital cash from property disposals or face insolvency.
This coalition said that a significant number of councils seeking to generate funds from a fire sale of holdings marked “a distinct shift from 2024, when the largest share (six in ten) of local leaders said they would focus on service redesigns and using financial reserves to weather increasing financial challenges.”
Detailed Cases of Proposed Disposals
Medway Council in southeast England announced its asset disposal plan included the sale of a retail complex in a local town and a social club in another town to raise 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 Rises and Wider Financial Pressures
This research of councils in the coalition, which covers several urban centers, also found that over seven in ten of authorities will have to raise local levies next spring to cover the growing cost of essential services, increased rates of housing insecurity, and a persistent housing shortage.
Medway council explained it will press ahead with asset sales after steep rises in the cost of children services, support for vulnerable learners, adult social care, and short-term housing.
“We are taking innovative approaches but certain measures take time to deliver both better provisions and financial savings,” said Vince Maple.
He continued: “There are population challenges which will continue to add to the strains we have. As a local government body, we had a 91% cut in our central funding from over the past decade, which is very challenging.”
National Trends and Forecasts
Research of county councils recently also found council budgets being strained by the increasing figures of children and older individuals needing Send support.
A network of councils projected that council deficits will reach £4.4bn a year by the end of the decade, as they struggle to cope with increased demand.
Ministers have put off planned reforms to the Send system until next year after a white paper outlining those changes has been postponed.
Deprivation and Funding Shortfalls
Based on the latest deprivation measures (IMD) for UK local authorities, many key cities members were among the most disadvantaged in England.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the top 30 across the country under the latest IMD measures,” noted the report.
“Although only one key city is among the top 10 for deprived neighbourhoods countrywide, urban areas are much more prone to be in the most deprived fifth of the nation. The figures underscores the scale of difficulties confronting local leaders across major urban centers in the coming year,” the analysis added.
“Council officials have been explicit about the necessity for a equitable and lasting funding system that accounts for and addresses the actual extent of disadvantage and demand,” said a council leader.
“Without this, local authorities will continue to face difficult decisions around which essential services 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 revealed.
