Based on a recent survey of local authorities, English councils are planning to offload social clubs, athletic facilities, and retail spaces as they bet on a fire sale of assets to stabilize finances.
Increasing Financial Challenges Prompt Asset Sales
The Key Cities Group for major urban areas in the UK reported that six out of ten of local authorities are planning to dispose of properties to meet the escalating costs of social services for vulnerable individuals.
Councils have in the past come under fire for disposing of playing fields and open spaces to support their budgets, but they contend they must proceed to generate essential revenue from asset sales or declare themselves bankrupt.
The group said that a significant number of councils seeking to generate funds from a fire sale of holdings marked “a distinct shift from 2024, when the majority (60%) of municipal officials said they would prioritise restructuring services and utilising savings to manage increasing financial challenges.”
Detailed Cases of Proposed Disposals
Medway Council in Kent said its asset disposal plan included the disposal of a shopping centre in Rainham and a community venue in another town to raise £20m over the next half-decade.
- A local golf course and commercial properties held in two English counties, which all generate rent for Medway council, will also be disposed of under the plan.
Council Tax Increases and Wider Financial Strains
The survey of local authorities in the coalition, which includes Sunderland, Southampton, Gloucester and Salford, also found that over seven in ten of councils will need to raise local levies next April to cover the rising cost of essential services, increased rates of homelessness, and a persistent accommodation deficit.
Medway council 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 temporary accommodation.
“We are adopting innovative approaches but certain measures take time to deliver both better provisions and financial savings,” said a council leader.
He added: “There are demographic pressures which will persist to increase the pressures we have. As a local government body, we had a drastic reduction in our central funding from 2010-24, which is extremely difficult.”
National Trends and Projections
Research of county councils recently further found council budgets being strained by the increasing figures of young people and adults needing special educational assistance.
The County Councils Network projected that council deficits will hit 4.4 billion pounds a year by 2029, as they grapple to manage increased demand.
Government officials have put off planned reforms to the Send system until next year after a white paper outlining those reforms has been postponed.
Disadvantage and Financial Shortfalls
According to the latest indices of deprivation (IMD) for English councils, many participating urban areas were among the most deprived in the country.
- “Participating urban centers like several major towns place in the top 30 across the country under the latest IMD measures,” noted the report.
“While only a single urban area is in the top 10 for disadvantaged communities countrywide, cities are much more prone to be in the most deprived fifth of the nation. The data underscores the extent of challenges facing municipal officials across key cities in the coming year,” the report added.
“Council officials have been explicit about the necessity for a fair and sustainable funding system that reflects and responds to the actual extent of deprivation and demand,” said Michael Mordey.
“Lacking this, local authorities will persist to face difficult decisions around which essential services to fund, and which to cut, to the disadvantage of their communities.”
A fifth of local authorities have cut or compromised social care provision in the last year, the survey found.
