Based on a latest poll of municipal councils, UK councils are planning to sell community centers, sports centres, and shopping arcades as they rely on a fire sale of assets to stabilize finances.
Increasing Fiscal Pressures Prompt Asset Sales
The Key Cities Group representing major urban areas in the UK reported that 60% of local authorities are intending to dispose of properties to meet the rising costs of social services for vulnerable individuals.
Councils have in the past come under fire for selling playing fields and open spaces to support their budgets, but they argue they must continue to raise vital cash from asset sales or declare themselves bankrupt.
This coalition noted that a significant number of authorities seeking to generate funds from a fire sale of assets represented “a distinct shift from 2024, when the majority (six in ten) of local leaders said they would prioritise service redesigns and utilising savings to manage increasing financial challenges.”
Specific Examples of Proposed Sales
Medway Council in southeast England said its property management strategy included the disposal of a retail complex in Rainham and a social club in another town to generate £20m over five years.
- A local golf course and business parks owned in Worcestershire and Suffolk, which all provide rental income for Medway council, will also be disposed of under the strategy.
Local Levy Rises and Wider Financial Strains
The survey of councils in the coalition, which includes Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of authorities will need to increase local levies next April to cover the rising cost of core provisions, higher levels of housing insecurity, and a longstanding accommodation deficit.
The authority said it will press ahead with property disposals after sharp increases in the cost of youth support, special educational needs and disability (Send) provision, elderly and disability services, and short-term housing.
“We are adopting creative strategies but certain measures take time to deliver both better provisions and cost efficiency,” stated a council leader.
He continued: “There are population challenges which will persist to increase the strains we have. As a local government body, we had a 91% cut in our central funding from over the past decade, which is extremely difficult.”
Countrywide Trends and Projections
Research of county councils this week also found local finances being strained by the increasing figures of children and adults needing Send support.
A network of councils said that council deficits will reach 4.4 billion pounds a year by 2029, as they grapple to manage rising needs.
Ministers have delayed scheduled changes to the Send system until next year after a white paper setting out those changes was recently delayed.
Deprivation and Financial Gaps
According to the latest deprivation measures (the Index of Multiple Deprivation) for UK local authorities, many participating urban areas were included in the most deprived in the country.
- “Member cities like several major towns place in the top 30 across the country under the latest deprivation indices,” said the study.
“While only a single urban area is in the ten most deprived for disadvantaged communities countrywide, cities are much more prone to be in the most deprived fifth of England. The figures underscores the extent of difficulties confronting local leaders across major urban centers in the coming year,” the analysis concluded.
“Council officials have been clear about the need for a fair and sustainable funding system that accounts for and addresses the actual extent of disadvantage and need,” stated a council leader.
“Without this, local authorities will persist to face difficult decisions around which vital provisions to allocate spend to, and which to reduce, to the detriment of their communities.”
A fifth of local authorities have cut or compromised social care provision in the last year, the study revealed.
