According to a new survey of municipal councils, UK councils are planning to offload social clubs, athletic facilities, and shopping arcades as they rely on a fire sale of properties to stabilize finances.
Increasing Fiscal Challenges Drive Asset Sales
A coalition of councils for second-tier cities in England reported that six out of ten of councils are intending to dispose of properties to cover the escalating 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 budgets, but they argue they must continue to generate essential revenue from property disposals or declare themselves bankrupt.
This coalition said that a significant number of councils attempting to generate funds from a fire sale of assets marked “a clear change from 2024, when the majority (60%) of municipal officials stated they would focus on restructuring services and using savings to manage increasing fiscal pressures.”
Detailed Cases of Proposed Disposals
One local authority in southeast England announced its asset disposal plan included the disposal of a retail complex in Rainham and a social club in Rochester to raise £20m over the next half-decade.
- A local golf course and business parks held in two English counties, which all generate rent for Medway council, will additionally be sold under the plan.
Local Levy Increases and Broader Fiscal Strains
The survey of local authorities in the key cities group, which includes several urban centers, also found that more than 70% of authorities will have to increase council taxes next spring to cover the growing 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 youth support, special educational needs and disability (Send) provision, adult social care, and temporary accommodation.
“We are adopting creative strategies but some of these require time to deliver both improved services and financial savings,” said Vince Maple.
He added: “We face population challenges which will persist to add to the pressures we have. As a local government body, we had a 91% cut in our revenue support grant from 2010-24, which is extremely difficult.”
Countrywide Trends and Forecasts
Research of regional authorities recently further found local finances being stretched by the increasing figures of children and older individuals requiring special educational assistance.
A network of councils said that council deficits will reach £4.4bn a year by 2029, 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 reforms was recently delayed.
Deprivation and Funding Gaps
According to the latest deprivation measures (the Index of Multiple Deprivation) covering UK local authorities, many key cities members were included in the most deprived in England.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton rank in the top 30 across the country under the latest IMD measures,” noted the study.
“Although only a single urban area is in the ten most deprived for deprived neighbourhoods countrywide, urban areas are much more prone to be in the worst-off 20% of the nation. The data underscores the extent of challenges facing local leaders across major urban centers in the coming year,” the report concluded.
“Local government leaders have been clear about the need for a fair and sustainable funding system that accounts for and responds to the actual extent of disadvantage and need,” said a council leader.
“Without this, councils will persist to face impossible choices around which vital provisions to allocate spend to, and which to reduce, to the disadvantage of their communities.”
A fifth of local authorities have reduced or weakened care services in the last year, the study found.
