Based on a new study of municipal councils, UK councils are preparing to offload community centers, sports centres, and shopping arcades as they rely on a rapid disposal of properties to balance the books.
Increasing Fiscal Challenges Prompt Asset Sales
The Key Cities Group for second-tier cities in the UK reported that six out of ten of councils are intending to sell assets to cover the rising costs of adult and children’s social care.
Local governments have in the past faced criticism for selling playing fields and land to support their finances, 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 raise money from a fire sale of holdings represented “a distinct shift from 2024, when the majority (six in ten) of local leaders said they would prioritise service redesigns and utilising financial reserves to weather growing financial challenges.”
Specific Examples of Proposed Sales
One local authority in Kent announced its property management strategy included the disposal of a shopping centre in Rainham and a social club in Rochester to generate £20m over the next half-decade.
- Gillingham golf club and business parks owned in Worcestershire and Suffolk, which all provide rental income for the authority, will also be sold under the plan.
Local Levy Rises and Broader Financial Strains
The survey of local authorities in the coalition, which covers Sunderland, Southampton, Gloucester and Salford, also found that over seven in ten of councils will need to increase council taxes next April to address the rising cost of essential services, increased rates of housing insecurity, and a persistent housing shortage.
Medway council explained it will proceed with asset sales after steep rises in the cost of youth support, support for vulnerable learners, elderly and disability services, and temporary accommodation.
“We are adopting innovative approaches but some of these take time to deliver both improved services and cost efficiency,” stated Vince Maple.
He continued: “We face population challenges which will persist to increase the strains we have. As a unitary authority, we had a drastic reduction in our revenue support grant from 2010-24, which is extremely difficult.”
National Trends and Forecasts
A survey of regional authorities this week also found council budgets being stretched by the growing number of young people and older individuals needing special educational assistance.
The County Councils Network projected that council deficits will reach 4.4 billion pounds a year by the end of the decade, as they grapple to cope with increased demand.
Ministers have put off scheduled changes to the special educational needs framework until next year after a policy document outlining those reforms has been postponed.
Deprivation and Funding Shortfalls
Based on the latest deprivation measures (the Index of Multiple Deprivation) covering English councils, many participating urban areas were among the most deprived in the country.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the most deprived 30 across the country under the latest deprivation indices,” said the study.
“While only a single urban area is among the top 10 for deprived neighbourhoods nationally, cities are much more prone to be in the most deprived fifth of the nation. The figures underscores the scale of difficulties confronting municipal officials across key cities in the next twelve months,” the report concluded.
“Council officials have been explicit about the need for a equitable and lasting financial structure that reflects and addresses the actual extent of disadvantage and need,” stated a council leader.
“Without this, councils will persist to face difficult decisions around which essential services to allocate spend to, and which to reduce, to the detriment of their communities.”
A fifth of councils have reduced or weakened care services in the last year, the study revealed.
