Based on a latest survey of municipal councils, UK councils are preparing to sell community centers, sports centres, and retail spaces as they rely on a fire sale of properties to stabilize finances.
Growing Fiscal Pressures Drive Asset Sales
The Key Cities Group for second-tier cities in England reported that six out of ten of local authorities are intending to dispose of properties to cover the escalating costs of adult and children’s social care.
Councils have previously faced criticism for disposing of playing fields and open spaces to support their finances, but they contend they must continue to raise vital cash from asset sales or face insolvency.
The group said that a significant number of councils seeking to generate funds from a fire sale of assets represented “a distinct shift from 2024, when the majority (60%) of local leaders said they would focus on service redesigns and utilising savings to manage growing financial challenges.”
Specific Examples of Planned Disposals
Medway Council in Kent announced its asset disposal plan included the disposal of a retail complex in a local town and a community venue in another town to generate £20m over five years.
- A local golf course and commercial properties owned in two English counties, which all generate rent for the authority, will additionally be disposed of under the plan.
Local Levy Increases and Wider Financial Pressures
This research of councils in the coalition, which includes Sunderland, Southampton, Gloucester and Salford, further found that over seven in ten of authorities will need to raise council taxes next spring to address the rising cost of core provisions, increased rates of housing insecurity, and a persistent accommodation deficit.
Medway council said it will press ahead with asset sales after steep rises in the cost of children services, special educational needs and disability (Send) provision, elderly and disability services, and short-term housing.
“We are adopting innovative approaches but certain measures require time to achieve both improved services and cost efficiency,” stated Vince Maple.
He added: “There are population challenges which will continue to increase the strains 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 Projections
A survey of regional authorities recently further found council budgets being strained by the growing number of young people and older individuals requiring Send support.
The County Councils Network projected that council deficits will reach 4.4 billion pounds a year by the end of the decade, as they grapple to cope with increased demand.
Government officials have delayed scheduled changes to the Send system until the coming year after a white paper outlining those reforms was recently delayed.
Disadvantage and Funding Shortfalls
Based on the latest deprivation measures (the Index of Multiple Deprivation) for English councils, many participating urban areas were included in the most disadvantaged in the country.
- “Member cities like several major towns rank in the top 30 across the country under the latest IMD measures,” said the report.
“Although only one key city is among the ten most deprived for deprived neighbourhoods countrywide, cities are far more likely to be in the most deprived fifth of England. The figures highlights the extent of challenges facing municipal officials across key cities in the coming year,” the report concluded.
“Council officials have been explicit about the need for a fair and sustainable funding system that accounts for and addresses the real levels of deprivation and demand,” stated Michael Mordey.
“Lacking this, councils will continue to face difficult decisions around which essential services to fund, and which to cut, to the disadvantage of their communities.”
One in five of councils have cut or compromised social care provision in the last year, the survey revealed.
