Based on a latest poll of municipal councils, UK councils are preparing to sell social clubs, athletic facilities, and shopping arcades as they bet on a fire sale of assets to balance the books.
Growing Financial Pressures Prompt Asset Sales
A coalition of councils representing second-tier cities in England reported that six out of ten of councils are planning to dispose of properties to cover the escalating costs of social services for vulnerable individuals.
Councils have in the past come under fire for disposing of playing fields and land to shore up their budgets, but they contend they must continue to raise vital cash from property disposals or declare themselves bankrupt.
This coalition noted that a high proportion of authorities attempting to raise money from a fire sale of assets marked “a distinct shift from 2024, when the majority (60%) of municipal officials stated they would focus on restructuring services and utilising savings to weather increasing financial challenges.”
Specific Examples of Proposed Sales
One local authority in Kent said its asset disposal plan featured the disposal of a retail complex in Rainham and a community venue in Rochester to raise 20 million pounds over five years.
- A local golf course and commercial properties owned in two English counties, which all provide rental income for the authority, will also be disposed of under the plan.
Local Levy Increases and Wider Financial Pressures
This research of local authorities in the coalition, which covers Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of authorities will need to raise council taxes next spring to cover the growing cost of essential services, increased rates of homelessness, and a persistent accommodation deficit.
The authority explained it will press ahead with asset sales after sharp increases in the cost of youth support, special educational needs and disability (Send) provision, adult social care, and short-term housing.
“We are adopting creative strategies but certain measures require time to achieve both better provisions and cost efficiency,” said Vince Maple.
He added: “There are population challenges which will persist to add to the strains we have. As a unitary authority, we had a 91% cut 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 older individuals requiring special educational assistance.
A network of councils said that local shortfalls will hit £4.4bn a year by the end of the decade, as they struggle to manage rising needs.
Government officials have put off planned reforms to the Send system until the coming year after a white paper setting out those changes was recently delayed.
Disadvantage and Financial Shortfalls
Based on the latest deprivation measures (the Index of Multiple Deprivation) for English councils, many key cities members were included in the most deprived in the country.
- “Participating urban centers like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton rank in the top 30 across the country under the latest deprivation indices,” noted the study.
“Although only a single urban area is in the ten most deprived for disadvantaged communities nationally, cities are much more prone to be in the worst-off 20% of England. The figures underscores the extent of challenges facing local leaders across major urban centers in the next twelve months,” the report concluded.
“Local government leaders have been explicit about the need for a equitable and lasting funding system that accounts for and addresses the actual extent of deprivation and need,” stated 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 detriment of their communities.”
A fifth of local authorities have reduced or weakened care services in the last year, the study revealed.
