Based on a recent survey of municipal councils, English councils are planning to offload social clubs, athletic facilities, and retail spaces as they rely on a fire sale of assets to balance the books.
Increasing Fiscal Challenges Prompt Asset Sales
The Key Cities Group representing major urban areas in the UK reported that 60% of councils are planning to dispose of properties to cover the rising costs of adult and children’s social care.
Local governments have in the past faced criticism for disposing of public land and open spaces to support their budgets, but they argue they must proceed to raise vital cash from property disposals or face insolvency.
This coalition noted that a significant number of councils attempting to generate funds from a quick sale of assets marked “a distinct shift from 2024, when the majority (60%) of local leaders stated they would focus on service redesigns and utilising financial reserves to manage increasing fiscal pressures.”
Detailed Examples of Proposed Disposals
Medway Council in Kent said its property management strategy included the sale of a retail complex in a local town and a social club in Rochester to raise £20m over the next half-decade.
- Gillingham golf club and business parks held in two English counties, which all provide rental income for the authority, will also be disposed of under the strategy.
Council Tax Increases and Broader Fiscal Strains
This research of councils in the coalition, which covers several urban centers, further found that over seven in ten of councils will need to raise local levies next spring to address the growing cost of core provisions, increased rates of housing insecurity, and a persistent accommodation deficit.
The authority said it will proceed with asset sales after steep rises in the cost of youth support, support for vulnerable learners, elderly and disability services, and short-term housing.
“We are taking innovative approaches but some of these take time to achieve both improved services and cost efficiency,” stated a council leader.
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 central funding from over the past decade, which is extremely difficult.”
Countrywide Patterns and Forecasts
A survey of county councils recently further found council budgets being stretched by the growing number of children and adults needing special educational assistance.
A network of councils said 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 put off scheduled changes to the special educational needs framework until next year after a white paper outlining those reforms was recently delayed.
Deprivation and Funding Shortfalls
According to the most recent indices of deprivation (the Index of Multiple Deprivation) for English councils, several participating urban areas were among the most deprived in England.
- “Participating urban centers like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the top 30 nationally under the latest IMD measures,” said the study.
“Although only one key city is in the top 10 for disadvantaged communities nationally, urban areas are far more likely to be in the most deprived fifth of the nation. The data highlights the scale of challenges confronting local leaders across key cities in the coming year,” the report added.
“Council officials have been clear about the necessity for a equitable and lasting financial structure that accounts for and addresses the actual extent of disadvantage and need,” said a council leader.
“Lacking this, local authorities will continue to face impossible choices around which essential services to allocate spend to, and which to reduce, to the disadvantage of their communities.”
One in five of councils have reduced or weakened care services in the last year, the study found.
