According to a latest survey of municipal councils, UK councils are planning to sell social clubs, sports centres, and shopping arcades as they rely on a fire sale of properties to balance the books.
Increasing Financial Pressures Drive Asset Sales
The Key Cities Group representing second-tier cities in England reported that six out of ten of local authorities are planning to dispose of properties to cover the escalating costs of adult and children’s social care.
Local governments have in the past faced criticism for disposing of public land and open spaces to shore up their finances, but they argue they must continue to generate essential revenue from asset sales or face insolvency.
This coalition noted that a high proportion of authorities attempting to raise money from a fire sale of holdings marked “a distinct shift from 2024, when the largest share (six in ten) of municipal officials said they would focus on service redesigns and using financial reserves to manage growing fiscal pressures.”
Specific Examples of Proposed Disposals
Medway Council in Kent announced its property management strategy included the sale of a shopping centre in Rainham and a social club in another town to raise 20 million pounds over five years.
- A local golf course and business parks held in two English counties, which all provide rental income for Medway council, will also be disposed of under the plan.
Council Tax Increases and Broader Fiscal Strains
This research of local authorities in the key cities group, which includes Sunderland, Southampton, Gloucester and Salford, further found that over seven in ten of authorities will need to increase local levies next spring to cover the rising cost of core provisions, higher levels of housing insecurity, and a longstanding housing shortage.
The authority explained it will proceed with property disposals after sharp increases in the cost of youth support, support for vulnerable learners, elderly and disability services, and temporary accommodation.
“We are adopting innovative approaches but some of these require time to achieve both better provisions and cost efficiency,” said Vince Maple.
He added: “We face population challenges which will continue to increase the pressures we have. As a local government body, we had a 91% cut in our central funding from 2010-24, which is very challenging.”
Countrywide Trends and Forecasts
A survey of county councils recently further found local finances being stretched by the growing number of children and adults requiring Send support.
A network of councils projected that council deficits will hit £4.4bn a year by the end of the decade, as they struggle to manage increased demand.
Government officials have delayed scheduled changes to the Send system until the coming year after a white paper outlining those changes has been postponed.
Disadvantage and Funding Shortfalls
According to the most recent deprivation measures (the Index of Multiple Deprivation) covering UK local authorities, several key cities members were included in the most disadvantaged in England.
- “Participating urban centers like several major towns place in the top 30 across the country under the latest IMD measures,” noted the report.
“Although only a single urban area is among the ten most deprived for disadvantaged communities countrywide, urban areas are much more prone to be in the most deprived fifth of England. The data underscores the scale of difficulties facing municipal officials across key cities in the next twelve months,” the analysis added.
“Council officials have been clear about the necessity for a fair and sustainable funding system that accounts for and responds to the real levels of deprivation and need,” stated a council leader.
“Lacking this, councils will continue to face impossible choices around which vital provisions to fund, and which to reduce, to the disadvantage of their residents.”
A fifth of local authorities have reduced or weakened care services in the past 12 months, the survey revealed.
