According to a new study of municipal councils, English councils are planning to offload social clubs, sports centres, and retail spaces as they bet on a rapid disposal of assets to balance the books.
Growing Financial Pressures Drive Asset Sales
The Key Cities Group for second-tier cities in the UK stated that 60% of local authorities are planning to sell assets to meet the escalating costs of adult and children’s social care.
Local governments have previously come under fire for selling playing fields and land to shore up their finances, but they argue they must proceed to generate essential revenue from property disposals or declare themselves bankrupt.
The group said that a high proportion of authorities attempting to generate funds from a fire sale of holdings marked “a distinct shift from 2024, when the largest share (six in ten) of municipal officials stated they would prioritise restructuring services and using financial reserves to weather increasing fiscal pressures.”
Specific Cases of Planned Sales
One local authority in Kent announced its asset disposal plan included the disposal of a retail complex in a local town and a social club in another town to generate £20m over the next half-decade.
- A local golf course and commercial properties owned in two English counties, which all provide rental income for Medway council, will also be sold under the strategy.
Local Levy Increases and Broader Financial Strains
The survey of local authorities in the coalition, which includes Sunderland, Southampton, Gloucester and Salford, also found that more than 70% of councils will have to raise council taxes next spring to cover the growing cost of core provisions, higher levels of homelessness, and a longstanding housing shortage.
Medway council said it will proceed with property disposals 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 achieve both better provisions and cost efficiency,” said a council leader.
He added: “We face demographic pressures which will continue to add to the pressures we have. As a local government body, we had a drastic reduction in our central funding from over the past decade, which is extremely difficult.”
Countrywide Trends and Projections
Research of county councils recently also found local finances being stretched by the growing number of young people and adults needing special educational assistance.
The County Councils Network projected that local shortfalls will hit £4.4bn a year by the end of the decade, as they grapple to cope with increased demand.
Ministers have delayed planned reforms to the Send system until next year after a white paper outlining those reforms has been postponed.
Disadvantage and Funding 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 disadvantaged in the country.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton rank in the most deprived 30 across the country under the latest IMD measures,” noted the study.
“While only a single urban area is among the top 10 for deprived neighbourhoods countrywide, urban areas are much more prone to be in the worst-off 20% of England. The figures underscores the scale of difficulties confronting municipal officials across major urban centers in the coming year,” the analysis added.
“Council officials have been clear about the need for a equitable and lasting funding system that reflects and responds to the actual extent of deprivation and need,” stated a council leader.
“Lacking this, councils will persist to face impossible choices around which vital provisions to allocate spend to, and which to cut, to the detriment of their residents.”
One in five of councils have reduced or weakened care services in the past 12 months, the survey revealed.
