According to a latest study of local authorities, UK councils are planning to offload community centers, sports centres, and retail spaces as they rely on a fire sale of assets to balance the books.
Increasing Financial Challenges Prompt Asset Sales
The Key Cities Group representing second-tier cities in England reported that 60% of councils are intending to dispose of properties to cover the rising costs of adult and children’s social care.
Local governments have previously come under fire for disposing of public land and open spaces to support their finances, but they argue they must continue to generate essential revenue from asset sales or declare themselves bankrupt.
The group said that a high proportion of authorities seeking to raise money from a fire sale of holdings marked “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 increasing financial challenges.”
Detailed Examples of Planned Sales
Medway Council in Kent said its property management strategy featured the sale of a retail complex in Rainham and a community venue in Rochester to raise £20m over five years.
- Gillingham golf club and commercial properties owned in Worcestershire and Suffolk, which all generate rent for Medway council, will also be sold under the plan.
Council Tax Increases and Broader Financial Pressures
The survey of councils in the coalition, which covers Sunderland, Southampton, Gloucester and Salford, further found that over seven in ten of councils will have to increase council taxes next April to address the rising cost of core provisions, higher levels of homelessness, and a longstanding housing shortage.
The authority said it will press ahead with property disposals after sharp increases in the cost of children services, special educational needs and disability (Send) provision, elderly and disability services, and short-term housing.
“We are adopting innovative approaches but certain measures take time to deliver both better provisions and financial savings,” stated a council leader.
He added: “We face demographic pressures which will continue to increase the strains we have. As a unitary authority, we had a drastic reduction in our revenue support grant from over the past decade, which is extremely difficult.”
Countrywide Patterns and Projections
Research of regional authorities recently further found council budgets being stretched by the increasing figures of children and adults needing special educational assistance.
A network of councils said that council deficits will reach £4.4bn a year by the end of the decade, as they grapple to manage increased demand.
Ministers have put off planned reforms to the special educational needs framework until the coming year after a policy document outlining those changes has been postponed.
Disadvantage and Funding Gaps
Based on the latest deprivation measures (the Index of Multiple Deprivation) for UK local authorities, many 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 most deprived 30 nationally under the latest deprivation indices,” noted the report.
“While only one key city is among the ten most deprived for disadvantaged communities nationally, cities are far more likely to be in the worst-off 20% of the nation. The data underscores the scale of challenges facing municipal officials across major urban centers in the coming year,” the analysis concluded.
“Council officials have been explicit about the need for a fair and sustainable financial structure that reflects and addresses the actual extent of deprivation and demand,” said Michael Mordey.
“Lacking this, local authorities will persist to face impossible choices around which vital provisions to allocate spend to, and which to reduce, to the detriment of their residents.”
A fifth of councils have reduced or weakened care services in the last year, the survey revealed.
