According to a latest study of municipal councils, UK councils are preparing to offload social clubs, sports centres, and shopping arcades as they rely on a fire sale of properties to balance the books.
Increasing Financial Challenges Drive 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 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 shore up their budgets, but they contend they must continue to generate essential revenue from asset sales or declare themselves bankrupt.
The group noted that a significant number of authorities seeking to generate funds from a fire sale of holdings represented “a distinct shift from 2024, when the majority (60%) of local leaders stated they would focus on service redesigns and utilising financial reserves to weather increasing financial challenges.”
Specific Cases of Planned Disposals
One local authority in southeast England announced its asset disposal plan featured the disposal of a shopping centre in a local town and a community venue in Rochester to raise £20m over five years.
- Gillingham golf club and business parks owned in Worcestershire and Suffolk, which all generate rent for Medway council, will also be sold under the plan.
Local Levy Rises and Broader Financial Pressures
This research of councils in the coalition, which includes Sunderland, Southampton, Gloucester and Salford, also found that over seven in ten of councils will have to increase council taxes next April to cover the rising cost of core provisions, higher levels of homelessness, and a persistent accommodation deficit.
The authority explained it will press ahead with property disposals after steep rises in the cost of children services, special educational needs and disability (Send) provision, adult social care, and short-term housing.
“We are adopting innovative approaches but some of these take time to achieve both better provisions and cost efficiency,” said Vince Maple.
He added: “We face population challenges which will persist to increase the strains we have. As a local government body, we had a drastic reduction in our central funding from 2010-24, which is extremely difficult.”
National Trends and Projections
Research of county councils this week further found local finances being strained by the increasing figures of children and adults needing special educational assistance.
A network of councils said that council deficits will reach £4.4bn a year by 2029, as they grapple to cope with rising needs.
Ministers have delayed planned reforms to the Send system until the coming year after a policy document outlining those reforms has been postponed.
Deprivation and Financial Gaps
According to the latest deprivation measures (IMD) covering English councils, many key cities members were included in the most disadvantaged in England.
- “Participating urban centers like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the most deprived 30 across the country under the latest IMD measures,” noted the study.
“Although only one key city is in the ten most deprived for deprived neighbourhoods nationally, cities are much more prone to be in the most deprived fifth of the nation. The data underscores the scale of challenges facing municipal officials across major urban centers in the coming year,” the report added.
“Council officials have been clear about the need for a equitable and lasting funding system that reflects and addresses the real levels of disadvantage and need,” said a council leader.
“Lacking this, local authorities will continue to face impossible choices around which essential services to fund, and which to cut, to the detriment of their communities.”
A fifth of councils have cut or compromised social care provision in the past 12 months, the study revealed.
