Based on a latest survey of local authorities, UK councils are planning to offload social clubs, athletic facilities, and retail spaces as they bet on a fire sale of assets to balance the books.
Increasing Fiscal Challenges Drive Asset Sales
The Key Cities Group representing second-tier cities in England reported that 60% of local authorities are intending to sell assets to meet the escalating costs of social services for vulnerable individuals.
Local governments have previously come under fire for selling playing fields and land to support their finances, but they contend they must proceed to raise vital cash from asset sales or declare themselves bankrupt.
This coalition noted that a significant number of authorities attempting to raise money from a quick sale of assets marked “a distinct shift from 2024, when the largest share (60%) of municipal officials said they would focus on restructuring services and utilising financial reserves to manage growing financial challenges.”
Detailed Cases of Proposed Disposals
One local authority in southeast England announced its property management strategy included the disposal of a shopping centre in a local town and a community venue in Rochester to generate £20m over the next half-decade.
- A local golf course and business parks held in Worcestershire and Suffolk, which all generate rent for the authority, will also be disposed of under the plan.
Council Tax Increases and Wider Fiscal Pressures
This research of local authorities in the key cities group, which covers several urban centers, further found that over seven in ten of councils will have to raise council taxes next spring to cover the growing cost of essential services, higher levels of homelessness, and a persistent accommodation deficit.
Medway council said it will press ahead with asset sales after sharp increases in the cost of children services, special educational needs and disability (Send) provision, elderly and disability services, and short-term housing.
“We are taking innovative approaches but certain measures require time to deliver both better provisions and financial savings,” stated a council leader.
He added: “There are population challenges which will continue to add to the pressures we have. As a unitary authority, we had a 91% cut in our revenue support grant from 2010-24, which is extremely difficult.”
National Trends and Forecasts
A survey of regional authorities recently also found local finances being strained by the increasing figures of children and adults needing special educational assistance.
The County Councils Network projected that council deficits will reach £4.4bn a year by the end of the decade, as they struggle to manage increased demand.
Ministers have put off scheduled changes to the Send system until the coming year after a white paper setting out those reforms was recently delayed.
Deprivation and Funding Shortfalls
According to the latest deprivation measures (IMD) covering English councils, several participating urban areas were among the most deprived in the country.
- “Participating urban centers like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the top 30 nationally under the latest IMD measures,” said the report.
“Although only one key city is in the top 10 for disadvantaged communities nationally, cities are much more prone to be in the worst-off 20% of the nation. The figures highlights the extent of challenges confronting municipal officials across key cities in the coming year,” the report concluded.
“Council officials have been clear about the necessity for a fair and sustainable funding system that accounts for and addresses the real levels of disadvantage and demand,” stated a council leader.
“Without this, local authorities will persist to face impossible choices around which vital provisions to fund, and which to reduce, to the disadvantage of their residents.”
One in five of local authorities have reduced or weakened care services in the last year, the study found.
