Based on a new study of municipal councils, UK councils are preparing to offload social clubs, sports centres, and retail spaces as they rely on a fire sale of assets to balance the books.
Increasing Fiscal Challenges Prompt Asset Sales
A coalition of councils representing major urban areas in the UK reported that six out of ten 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 come under fire for selling playing fields and open spaces to shore up their budgets, but they argue they must proceed to raise vital cash from property disposals or face insolvency.
The group said that a significant number of councils seeking to raise money from a quick sale of assets marked “a distinct shift from 2024, when the majority (six in ten) of local leaders said they would focus on restructuring services and utilising savings to manage growing fiscal pressures.”
Detailed Examples of Proposed Disposals
One local authority in southeast England said its property management strategy featured the sale of a retail complex in a local town and a community venue in another town to raise £20m over five years.
- A local golf course and commercial properties held 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 several urban centers, also found that more than 70% of authorities will need to raise local levies next spring to address the rising cost of core provisions, increased rates of housing insecurity, and a persistent housing shortage.
The authority said it will press ahead with asset sales after steep rises in the cost of children services, special educational needs and disability (Send) provision, elderly and disability services, and short-term housing.
“We are adopting creative strategies but some of these take time to deliver both improved services and cost efficiency,” stated a council leader.
He added: “We face population challenges which will continue to add to the pressures we have. As a unitary authority, we had a 91% cut in our central funding from over the past decade, which is very challenging.”
Countrywide Trends and Forecasts
Research of county councils recently also found local finances being strained by the increasing figures of young people and adults requiring special educational assistance.
The County Councils Network said that council deficits will hit 4.4 billion pounds a year by the end of the decade, as they struggle to cope with rising needs.
Ministers have put off scheduled changes to the Send system until next year after a white paper setting out those reforms was recently delayed.
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 disadvantaged in the country.
- “Member cities like several major towns place in the top 30 across the country under the latest deprivation indices,” said the report.
“While only one key city is among the top 10 for disadvantaged communities countrywide, cities are far more likely to be in the worst-off 20% of the nation. The data underscores the extent of difficulties confronting municipal officials across major urban centers in the next twelve months,” the analysis concluded.
“Local government leaders have been clear about the need for a fair and sustainable financial structure that reflects and addresses the real levels of deprivation and need,” stated a council leader.
“Lacking this, councils will continue to face difficult decisions around which essential services to allocate spend to, and which to reduce, to the disadvantage of their residents.”
A fifth of local authorities have cut or compromised care services in the last year, the survey revealed.
