Based on a recent survey of municipal councils, UK councils are preparing to offload social clubs, sports centres, and shopping arcades as they bet on a rapid disposal of assets to balance the books.
Increasing Fiscal Challenges Prompt Asset Sales
The Key Cities Group representing second-tier cities in the UK reported that six out of ten of local authorities are intending to dispose of properties to meet the rising costs of social services for vulnerable individuals.
Local governments have in the past faced criticism for selling playing fields and land to support their budgets, but they contend they must continue to raise vital cash from asset sales or face insolvency.
This coalition noted that a significant number of councils attempting to generate funds from a fire sale of holdings represented “a distinct shift from 2024, when the largest share (six in ten) of municipal officials stated they would prioritise service redesigns and utilising financial reserves to weather growing financial challenges.”
Specific Examples of Proposed Disposals
One local authority in Kent said its asset disposal plan included the sale of a retail complex in Rainham and a community venue in Rochester to generate £20m over the next half-decade.
- A local golf course and business parks owned in Worcestershire and Suffolk, which all generate rent for Medway council, will additionally be disposed of under the strategy.
Local Levy Increases and Broader Financial Pressures
The survey of local authorities in the key cities group, which includes several urban centers, also found that more than 70% of councils will have to increase local levies next April to cover the growing cost of essential services, increased rates of housing insecurity, and a persistent housing shortage.
The authority explained it will press ahead with asset sales after steep rises in the cost of children services, support for vulnerable learners, elderly and disability services, and short-term housing.
“We are taking innovative approaches but some of these require time to achieve both improved services and financial savings,” said Vince Maple.
He added: “There are population challenges which will persist to add to the pressures we have. As a unitary authority, we had a drastic reduction in our revenue support grant from 2010-24, which is very challenging.”
Countrywide Trends and Forecasts
Research of regional authorities recently also found local finances being stretched by the increasing figures of children and older individuals requiring special educational assistance.
The County Councils Network said that council deficits will hit £4.4bn a year by the end of the decade, as they struggle to cope with rising needs.
Government officials have put off scheduled changes to the special educational needs framework until next year after a policy document outlining those changes has been postponed.
Deprivation and Funding Gaps
According to the most recent deprivation measures (IMD) for English councils, several participating urban areas were included in the most deprived in the country.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton rank in the most deprived 30 nationally under the latest IMD measures,” said the study.
“Although only a single urban area is in the top 10 for deprived neighbourhoods nationally, cities are much more prone to be in the worst-off 20% of England. The data highlights the extent of difficulties facing local leaders across key cities in the coming year,” the analysis added.
“Council officials have been clear about the need for a fair and sustainable funding system that accounts for and addresses the real levels of disadvantage and need,” said a council leader.
“Without this, councils will persist to face impossible choices around which essential services to fund, and which to reduce, to the disadvantage of their communities.”
One in five of local authorities have cut or compromised care services in the past 12 months, the study revealed.
