According to a recent survey of municipal councils, UK councils are preparing to sell social clubs, athletic facilities, and shopping arcades as they bet on a fire sale of assets to balance the books.
Increasing Fiscal Pressures Drive Asset Sales
The Key Cities Group representing second-tier cities in the UK stated that 60% of councils are intending to dispose of properties to meet the rising costs of adult and children’s social care.
Councils have in the past faced criticism for selling playing fields and land to shore up their budgets, but they argue they must proceed to generate essential revenue from asset sales or face insolvency.
This coalition said 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 municipal officials stated they would prioritise service redesigns and using financial reserves to weather growing fiscal pressures.”
Detailed Cases of Proposed Disposals
Medway Council in southeast England said its property management strategy featured the sale of a retail complex in Rainham and a community venue in another town to generate £20m over five years.
- Gillingham golf club and business parks owned in Worcestershire and Suffolk, which all provide rental income for Medway council, will additionally be disposed of under the plan.
Council Tax Rises and Wider Financial Pressures
This research of councils in the coalition, which covers Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of councils will have to increase council taxes next spring 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, special educational needs and disability (Send) provision, adult social care, and temporary accommodation.
“We are adopting creative strategies but some of these require time to achieve both better provisions and financial savings,” stated a council leader.
He added: “There are population challenges which will persist to add to the strains we have. As a local government body, we had a drastic reduction in our revenue support grant from 2010-24, which is extremely difficult.”
Countrywide Trends and Forecasts
Research of regional authorities recently further found local finances being strained by the increasing figures of children and older individuals requiring Send support.
The County Councils Network said that local shortfalls will hit £4.4bn a year by 2029, as they grapple to cope with rising needs.
Ministers have delayed scheduled changes to the special educational needs framework until the coming year after a policy document setting out those changes was recently delayed.
Deprivation and Financial Shortfalls
Based on the most recent indices of deprivation (the Index of Multiple Deprivation) for UK local authorities, many key cities members were included in the most disadvantaged in England.
- “Participating urban centers like several major towns rank in the most deprived 30 nationally under the latest IMD measures,” noted the report.
“While only one key city is among the top 10 for deprived neighbourhoods nationally, cities are much more prone to be in the worst-off 20% of the nation. The data underscores the extent of challenges confronting local leaders across key cities in the coming year,” the report concluded.
“Local government leaders have been explicit about the necessity for a fair and sustainable financial structure that accounts for and addresses the real levels of disadvantage and demand,” said Michael Mordey.
“Lacking this, local authorities will continue to face impossible choices around which vital provisions to fund, and which to cut, to the disadvantage of their communities.”
One in five of councils have cut or compromised social care provision in the last year, the study revealed.
