Based on a new survey of local authorities, UK councils are preparing to sell community centers, athletic facilities, and shopping arcades as they rely on a rapid disposal of assets to balance the books.
Increasing Financial Pressures Drive Asset Sales
The Key Cities Group representing second-tier cities in England stated that 60% of councils are intending to dispose of properties to meet the escalating costs of adult and children’s social care.
Local governments have in the past come under fire for selling public land and open spaces to shore up their budgets, but they contend they must continue to raise vital cash from asset sales or declare themselves bankrupt.
This coalition noted that a high proportion of authorities seeking to generate funds from a fire sale of assets marked “a distinct shift from 2024, when the largest share (six in ten) of local leaders said they would focus on restructuring services and using financial reserves to manage growing financial challenges.”
Specific Examples of Proposed Disposals
Medway Council in southeast England said its asset disposal plan featured the disposal of a shopping centre in a local town and a social club in Rochester to generate £20m over the next half-decade.
- Gillingham golf club and commercial properties held in two English counties, which all provide rental income for the authority, will additionally be disposed of under the plan.
Council Tax Rises and Wider Fiscal Strains
The survey of councils in the coalition, which covers Sunderland, Southampton, Gloucester and Salford, also found that more than 70% of authorities will have to increase local levies next spring to address the rising cost of essential services, higher levels of homelessness, and a persistent accommodation deficit.
Medway council said it will press ahead with property disposals after steep rises in the cost of children services, support for vulnerable learners, adult social care, and temporary accommodation.
“We are adopting creative strategies but certain measures require time to deliver both improved services and financial savings,” said a council leader.
He added: “We face demographic pressures which will continue to increase the pressures we have. As a unitary authority, we had a drastic reduction in our revenue support grant from 2010-24, which is very challenging.”
Countrywide Patterns and Forecasts
Research of county councils recently also found council budgets being stretched by the growing number of children and older individuals requiring Send support.
A network of councils projected that local shortfalls will reach £4.4bn a year by the end of the decade, as they struggle to cope with increased demand.
Ministers have delayed scheduled changes to the special educational needs framework until the coming year after a white paper outlining those reforms was recently delayed.
Deprivation and Funding Shortfalls
Based on the latest indices of deprivation (IMD) for UK local authorities, many key cities members were included in the most deprived in the country.
- “Participating urban centers like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton rank in the top 30 nationally under the latest IMD measures,” said the study.
“While only one key city is among the ten most deprived for disadvantaged communities nationally, urban areas are much more prone to be in the worst-off 20% of the nation. The data underscores the extent of difficulties facing local leaders across major urban centers in the coming year,” the report concluded.
“Local government leaders have been explicit about the necessity for a fair and sustainable financial structure that reflects and addresses the actual extent of disadvantage and need,” stated Michael Mordey.
“Lacking this, local authorities will continue to face difficult decisions around which vital provisions to fund, and which to cut, to the detriment of their residents.”
One in five of councils have reduced or weakened care services in the last year, the survey revealed.
