Based on a new poll of municipal councils, UK councils are planning to offload social clubs, sports centres, and retail spaces as they rely on a fire sale of properties to balance the books.
Increasing Financial Pressures Prompt Asset Sales
A coalition of councils representing major urban areas in England reported that 60% of local authorities are intending to dispose of properties to meet the rising costs of social services for vulnerable individuals.
Councils have in the past faced criticism for disposing of public land and land to shore up their budgets, but they argue they must continue to generate essential revenue from property disposals or face insolvency.
The group said that a high proportion of authorities attempting to raise money from a quick sale of assets represented “a distinct shift from 2024, when the majority (six in ten) of municipal officials said they would focus on service redesigns and using financial reserves to weather growing fiscal pressures.”
Detailed Cases of Proposed Sales
One local authority in Kent said its asset disposal plan featured the disposal of a shopping centre in Rainham and a social club in Rochester to generate £20m over the next half-decade.
- A local golf course and commercial properties owned in two English counties, which all provide rental income for Medway council, will also be disposed of under the strategy.
Council Tax Increases and Wider Fiscal Pressures
This research of local authorities in the key cities group, which includes Sunderland, Southampton, Gloucester and Salford, also found that over seven in ten of authorities will need to increase council taxes next spring to cover the rising cost of essential services, higher levels of housing insecurity, and a persistent housing shortage.
The authority said it will press ahead with asset sales after sharp increases in the cost of children services, special educational needs and disability (Send) provision, adult social care, and short-term housing.
“We are adopting innovative approaches but some of these require time to achieve both improved services and cost efficiency,” said a council leader.
He continued: “There are population challenges which will continue to add to the strains we have. As a local government body, we had a drastic reduction in our revenue support grant from over the past decade, which is very challenging.”
Countrywide Patterns and Forecasts
Research of regional authorities this week also found council budgets being stretched by the growing number of children and adults requiring Send support.
The County Councils Network projected that local shortfalls will reach £4.4bn a year by the end of the decade, as they struggle to manage rising needs.
Ministers have put off planned reforms to the special educational needs framework until the coming year after a white paper outlining those changes was recently delayed.
Deprivation and Funding Shortfalls
Based on the latest indices of deprivation (the Index of Multiple Deprivation) covering UK local authorities, many participating urban areas were included in the most deprived in England.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the top 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 disadvantaged communities nationally, urban areas are far more likely to be in the most deprived fifth of England. The figures highlights the scale of difficulties facing municipal officials across major urban centers in the next twelve months,” the analysis added.
“Local government leaders have been clear about the need for a equitable and lasting funding system that accounts for and addresses the real levels of disadvantage and need,” said Michael Mordey.
“Without this, councils will continue to face difficult decisions around which essential services to fund, and which to cut, to the detriment of their residents.”
One in five of councils have cut or compromised care services in the past 12 months, the study revealed.
