Based on a new study of municipal councils, UK councils are planning to sell social clubs, athletic facilities, and retail spaces as they rely on a rapid disposal of assets to balance the books.
Growing Financial Pressures Prompt Asset Sales
The Key Cities Group for second-tier cities in England stated that six out of ten of councils are intending to sell assets to cover the escalating costs of adult and children’s social care.
Local governments have previously faced criticism for selling public land and open spaces to shore up their budgets, but they argue they must proceed to raise vital cash from asset sales or declare themselves bankrupt.
This coalition said that a significant number of authorities seeking to raise money from a fire sale of assets represented “a distinct shift from 2024, when the largest share (six in ten) of local leaders stated they would focus on restructuring services and utilising savings to manage growing financial challenges.”
Specific Examples of Proposed Disposals
Medway Council in southeast England announced its property management strategy included the disposal of a shopping centre in a local town and a community venue in another town to raise £20m over five years.
- A local golf course and business parks held in Worcestershire and Suffolk, which all provide rental income for Medway council, will additionally be disposed of under the plan.
Council Tax Increases and Broader Financial Strains
This research of councils in the key cities group, which covers several urban centers, further found that more than 70% of councils will need to increase local levies next spring to address the growing cost of essential services, higher levels of homelessness, and a persistent housing shortage.
The authority explained it will proceed with property disposals after steep rises in the cost of youth support, support for vulnerable learners, adult social care, and short-term housing.
“We are adopting innovative approaches but certain measures take time to achieve both better provisions and financial savings,” stated Vince Maple.
He continued: “There are population challenges which will continue to add to the strains we have. As a local government body, we had a 91% cut in our central funding from 2010-24, which is extremely difficult.”
National Trends and Forecasts
A survey of county councils recently further found local finances being strained by the increasing figures of children and older individuals needing special educational assistance.
A network of councils said that council deficits will reach 4.4 billion pounds a year by 2029, as they struggle to cope with rising needs.
Government officials have delayed planned reforms to the Send system until the coming year after a policy document outlining those changes has been postponed.
Disadvantage and Funding Shortfalls
Based on the most recent indices of deprivation (the Index of Multiple Deprivation) for UK local authorities, several key cities members were among the most deprived in England.
- “Participating urban centers like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton rank in the top 30 across the country under the latest deprivation indices,” noted the report.
“While only one key city is among the ten most deprived for deprived neighbourhoods nationally, urban areas are far more likely to be in the worst-off 20% of the nation. The data underscores the scale of challenges confronting local leaders across key cities in the next twelve months,” the analysis concluded.
“Council officials have been clear about the necessity for a equitable and lasting funding system that reflects and addresses the actual extent of deprivation and demand,” said Michael Mordey.
“Lacking this, councils will persist to face impossible choices around which vital provisions to fund, and which to cut, to the detriment of their residents.”
One in five of councils have cut or compromised care services in the past 12 months, the survey revealed.
