Based on a latest study of municipal councils, UK councils are planning to sell social clubs, athletic facilities, and retail spaces as they bet on a fire sale of assets to stabilize finances.
Growing Fiscal Challenges Prompt Asset Sales
A coalition of councils for second-tier cities in England stated that six out of ten of councils are intending to sell assets to meet the rising costs of adult and children’s social care.
Local governments have in the past come under fire for disposing of playing fields and open spaces to shore up their budgets, but they argue they must continue to generate essential revenue from asset sales or declare themselves bankrupt.
The group noted that a significant number of authorities attempting to generate funds from a quick sale of assets represented “a distinct shift from 2024, when the majority (60%) of local leaders said they would focus on service redesigns and using financial reserves to weather increasing financial challenges.”
Detailed Examples of Proposed Sales
Medway Council in southeast England announced its property management strategy included the sale of a shopping centre in a local town and a community venue in Rochester to generate 20 million pounds over the next half-decade.
- Gillingham golf club and commercial properties owned in two English counties, which all provide rental income for Medway council, will additionally be sold under the strategy.
Local Levy Rises and Wider Fiscal Pressures
This research of local authorities in the key cities group, which includes several urban centers, further found that more than 70% of authorities will have to increase council taxes next April to address the growing cost of core provisions, higher levels of housing insecurity, and a persistent accommodation deficit.
Medway council said it will press ahead with property disposals 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 some of these take time to achieve both improved services and cost efficiency,” stated Vince Maple.
He added: “There are population challenges which will continue to increase the strains we have. As a local government body, we had a drastic reduction in our revenue support grant from over the past decade, which is extremely difficult.”
National Trends and Forecasts
Research of regional authorities recently also found council budgets being strained by the increasing figures of young people and adults requiring Send support.
A network of councils projected that council deficits will hit £4.4bn a year by 2029, as they grapple to manage increased demand.
Government officials have put off planned reforms to the special educational needs framework until next year after a white paper setting out those changes was recently delayed.
Disadvantage and Funding Shortfalls
According to the latest deprivation measures (IMD) for UK local authorities, several participating urban areas were included in the most disadvantaged in the country.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the most deprived 30 nationally under the latest IMD measures,” said the study.
“While only one key city is among the top 10 for disadvantaged communities nationally, cities are much more prone to be in the worst-off 20% of the nation. The data highlights the scale of challenges facing local leaders across major urban centers in the coming year,” the analysis added.
“Council officials have been clear about the necessity for a fair and sustainable funding system that reflects and responds to the real levels of deprivation and need,” stated Michael Mordey.
“Without this, councils will continue to face difficult decisions around which vital provisions to fund, and which to reduce, to the detriment of their residents.”
One in five of local authorities have cut or compromised care services in the past 12 months, the study found.
