Based on a new survey of local authorities, UK councils are preparing to offload social clubs, sports centres, and shopping arcades as they bet on a rapid disposal of assets to balance the books.
Increasing Fiscal Pressures Prompt Asset Sales
A coalition of councils for second-tier cities in the UK reported that 60% of councils are intending to sell assets to cover the rising costs of social services for vulnerable individuals.
Local governments have previously come under fire for disposing of playing fields and open spaces to shore up their budgets, but they argue they must proceed to generate essential revenue from property disposals or declare themselves bankrupt.
This coalition noted that a significant number of authorities seeking to generate funds from a quick sale of holdings represented “a distinct shift from 2024, when the largest share (60%) of local leaders stated they would prioritise service redesigns and using savings to weather growing financial challenges.”
Specific Cases of Proposed Sales
Medway Council in Kent announced its property management strategy included the sale of a shopping centre in a local town and a community venue in another town to generate £20m over five years.
- A local golf course and business parks held in Worcestershire and Suffolk, which all provide rental income for Medway council, will additionally be sold under the plan.
Local Levy Rises and Broader Financial Pressures
This research of councils in the key cities group, which covers Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of authorities will need to increase council taxes next April to cover the rising cost of essential services, increased rates of homelessness, and a persistent housing shortage.
Medway council said it will press ahead with asset sales after steep rises in the cost of children services, support for vulnerable learners, adult social care, and short-term housing.
“We are adopting innovative approaches but some of these take time to deliver both improved services and financial savings,” stated a council leader.
He added: “We face demographic pressures which will continue to increase the strains we have. As a local government body, we had a 91% cut in our central funding from over the past decade, which is very challenging.”
Countrywide Patterns and Projections
Research of regional authorities recently further found local finances being stretched by the increasing figures of young people and older individuals needing Send support.
The County Councils Network said that local shortfalls will reach £4.4bn a year by 2029, as they grapple to manage increased demand.
Ministers have put off scheduled changes to the Send system until next year after a white paper outlining those reforms was recently delayed.
Deprivation and Financial Shortfalls
Based on the latest indices of deprivation (the Index of Multiple Deprivation) covering English councils, many participating urban areas were included in the most deprived in England.
- “Participating urban centers like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the top 30 across the country under the latest IMD measures,” noted the study.
“Although only one key city is in the top 10 for deprived neighbourhoods nationally, urban areas are far more likely to be in the worst-off 20% of the nation. The figures highlights the scale of difficulties confronting municipal officials across major urban centers in the coming year,” the report added.
“Council officials have been clear about the need for a fair and sustainable financial structure that accounts for and responds to the actual extent of deprivation and need,” said Michael Mordey.
“Lacking this, councils will persist to face difficult decisions around which vital provisions to fund, and which to cut, to the disadvantage of their communities.”
A fifth of local authorities have cut or compromised care services in the past 12 months, the study revealed.
