Based on a recent survey of municipal councils, UK councils are preparing to sell social clubs, sports centres, and shopping arcades as they bet on a fire sale of assets to stabilize finances.
Growing Fiscal Challenges Drive Asset Sales
The Key Cities Group representing second-tier cities in England reported 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 previously come under fire for selling playing fields and land to support their finances, but they argue they must proceed to raise vital cash from property disposals or face insolvency.
This coalition said that a high proportion of councils attempting to raise money from a quick sale of assets represented “a distinct shift from 2024, when the majority (60%) of municipal officials said they would focus on restructuring services and using financial reserves to weather increasing financial challenges.”
Specific Examples of Proposed Sales
Medway Council in southeast England announced its property management strategy featured the disposal of a retail complex in Rainham and a social club in Rochester to raise £20m over the next half-decade.
- Gillingham golf club and business parks owned in two English counties, which all generate rent for the authority, will additionally be disposed of under the plan.
Local Levy Increases and Broader Fiscal Strains
This research of councils in the key cities group, which covers Sunderland, Southampton, Gloucester and Salford, further found that over seven in ten of councils will need to raise council taxes next spring to cover the rising cost of core provisions, higher levels of housing insecurity, and a persistent accommodation deficit.
The authority said it will proceed with asset sales after steep rises in the cost of children services, special educational needs and disability (Send) provision, elderly and disability services, and short-term housing.
“We are adopting creative strategies but certain measures take time to deliver both better provisions and financial savings,” said Vince Maple.
He added: “We face demographic pressures 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 2010-24, which is very challenging.”
National Trends and Forecasts
Research of county councils this week also found council budgets being stretched by the increasing figures of children and adults needing Send support.
A network of councils projected that local shortfalls 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 white paper outlining those changes was recently delayed.
Deprivation and Funding Gaps
Based on the latest indices of deprivation (the Index of Multiple Deprivation) covering UK local authorities, many participating urban areas were included in the most deprived in the country.
- “Participating urban centers like several major towns rank in the top 30 across the country under the latest IMD measures,” said the report.
“Although only a single urban area is among the ten most deprived for deprived neighbourhoods nationally, cities are much more prone to be in the worst-off 20% of England. The data underscores the extent of difficulties confronting municipal officials across key cities in the next twelve months,” the analysis added.
“Local government leaders have been explicit about the necessity for a equitable and lasting funding system that reflects and responds to the actual extent of disadvantage and demand,” stated Michael Mordey.
“Without this, councils will continue to face impossible choices around which essential services to allocate spend to, and which to reduce, to the disadvantage of their residents.”
One in five of local authorities have reduced or weakened care services in the past 12 months, the survey revealed.
