Based on a new study of municipal councils, UK councils are planning to offload social clubs, sports centres, and retail spaces as they bet on a fire sale of assets to balance the books.
Growing Fiscal Challenges Drive Asset Sales
The Key Cities Group for second-tier cities in the UK stated that 60% of councils are intending to dispose of properties to meet the rising costs of adult and children’s social care.
Councils have previously faced criticism for disposing of public land and land to support their budgets, but they argue they must proceed to raise vital cash from asset sales or declare themselves bankrupt.
The group said that a high proportion of authorities seeking to raise money from a quick sale of assets represented “a distinct shift from 2024, when the largest share (six in ten) of local leaders said they would prioritise restructuring services and using savings to weather increasing financial challenges.”
Specific Examples of Proposed Disposals
Medway Council in Kent said its property management strategy included the disposal of a shopping centre in Rainham and a community venue 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 Medway council, will additionally be disposed of under the strategy.
Council Tax Increases and Broader Financial Strains
This research of councils in the key cities group, which includes Sunderland, Southampton, Gloucester and Salford, further found that over seven in ten of councils will need to raise local levies next April to address the growing cost of core provisions, higher levels of housing insecurity, and a longstanding housing shortage.
Medway council explained it will proceed with property disposals after sharp increases in the cost of children services, special educational needs and disability (Send) provision, elderly and disability services, and short-term housing.
“We are adopting innovative approaches but some of these require time to deliver both better provisions and cost efficiency,” said Vince Maple.
He continued: “We face demographic pressures which will continue to increase the pressures we have. As a local government body, we had a 91% cut in our revenue support grant from over the past decade, which is extremely difficult.”
National Trends and Forecasts
Research of regional authorities recently further found local finances being strained by the growing number of young people and older individuals requiring Send support.
The County Councils Network said that council deficits will reach 4.4 billion pounds a year by 2029, as they struggle to cope with rising needs.
Government officials have delayed scheduled changes to the special educational needs framework until the coming year after a white paper setting out those reforms was recently delayed.
Disadvantage and Funding Shortfalls
According to the most recent deprivation measures (IMD) for UK local authorities, several key cities members were among the most disadvantaged in England.
- “Participating urban centers like several major towns rank in the most deprived 30 nationally under the latest IMD measures,” said the study.
“Although only one key city is among the top 10 for disadvantaged communities nationally, cities are far more likely to be in the most deprived fifth of England. The data highlights the extent of challenges confronting municipal officials across major urban centers in the coming year,” the report added.
“Council officials have been explicit about the need for a fair and sustainable financial structure that accounts for and addresses the real levels of deprivation and need,” stated Michael Mordey.
“Lacking this, councils will persist to face impossible choices around which essential services to fund, and which to reduce, to the detriment of their residents.”
One in five of local authorities have reduced or weakened care services in the last year, the survey found.
