Based on a new study of local authorities, UK councils are preparing to offload community centers, sports centres, and shopping arcades as they rely on a fire sale of properties to balance the books.
Increasing Fiscal Challenges Prompt Asset Sales
The Key Cities Group representing second-tier cities in England stated that 60% of councils are intending to dispose of properties to cover the escalating costs of adult and children’s social care.
Councils have in the past come under fire for selling playing fields and land to support their budgets, but they contend they must continue to raise vital cash from asset sales or declare themselves bankrupt.
This coalition said that a high proportion of councils seeking to raise money from a fire sale of holdings represented “a distinct shift from 2024, when the majority (60%) of local leaders stated they would focus on service redesigns and using savings to manage increasing fiscal pressures.”
Detailed Examples of Proposed Disposals
One local authority in southeast England said its asset disposal plan featured the disposal of a retail complex in Rainham and a social club in Rochester to raise £20m over five years.
- A local golf course and business parks owned in two English counties, which all provide rental income for Medway council, will additionally be sold under the plan.
Local Levy Increases and Wider Financial Strains
This research of local authorities in the key cities group, which covers several urban centers, also found that over seven in ten of councils will have to increase local levies next spring to cover the rising cost of essential services, increased rates of homelessness, and a persistent accommodation deficit.
Medway council explained it will proceed with property disposals after steep rises in the cost of children services, support for vulnerable learners, elderly and disability services, and temporary accommodation.
“We are taking creative strategies but some of these require time to achieve both improved services and cost efficiency,” stated Vince Maple.
He added: “We face demographic pressures which will persist 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 local finances being strained by the increasing figures of children and older individuals requiring Send support.
The County Councils Network said that local shortfalls will hit £4.4bn a year by 2029, as they grapple to manage rising needs.
Government officials have put off scheduled changes to the Send system until the coming year after a policy document outlining those changes has been postponed.
Disadvantage and Financial Gaps
Based on the latest indices of deprivation (IMD) for English councils, several participating urban areas were included in the most disadvantaged in the country.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton rank in the most deprived 30 across the country under the latest deprivation indices,” said the study.
“Although only one key city is in the top 10 for disadvantaged communities countrywide, urban areas are far more likely to be in the worst-off 20% of England. The data highlights the scale of challenges confronting municipal officials across key cities in the coming year,” the analysis added.
“Local government leaders have been clear about the necessity for a fair and sustainable funding system that reflects and addresses the real levels of deprivation and demand,” stated Michael Mordey.
“Lacking this, local authorities will continue to face impossible choices around which essential services to fund, and which to cut, to the detriment of their communities.”
One in five of local authorities have cut or compromised social care provision in the last year, the survey found.
