Based on a new survey of municipal councils, UK councils are preparing to sell social clubs, sports centres, and shopping arcades as they bet on a fire sale of assets to balance the books.
Increasing Fiscal Pressures 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 sell assets to meet the rising costs of adult and children’s social care.
Councils have in the past faced criticism for selling playing fields and open spaces to shore up their finances, but they contend they must continue to generate essential revenue from property disposals or declare themselves bankrupt.
This coalition said that a significant number of authorities seeking to raise money from a fire sale of holdings marked “a distinct shift from 2024, when the majority (60%) of municipal officials said they would focus on service redesigns and using savings to manage growing fiscal pressures.”
Detailed Cases of Planned Disposals
Medway Council in southeast England said its asset disposal plan featured the sale of a shopping centre in a local town and a community venue in Rochester to raise 20 million pounds over five years.
- A local golf course and commercial properties owned in Worcestershire and Suffolk, which all generate rent for the authority, will also be disposed of under the strategy.
Local Levy Rises and Wider Financial Pressures
The survey of local authorities in the key cities group, which includes Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of authorities will have to raise local levies next April to cover the rising cost of essential services, increased rates of homelessness, and a persistent housing shortage.
The authority explained it will press ahead with asset sales after sharp increases in the cost of children services, special educational needs and disability (Send) provision, elderly and disability services, and short-term housing.
“We are taking 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 unitary authority, we had a 91% cut in our revenue support grant from over the past decade, which is very challenging.”
National Patterns and Forecasts
Research of county councils this week further found council budgets being stretched by the growing number of children and adults needing Send support.
A network of councils said that local shortfalls will reach £4.4bn a year by the end of the decade, as they grapple to manage increased demand.
Government officials have put off scheduled changes to the special educational needs framework until the coming year after a policy document outlining those reforms has been postponed.
Deprivation and Funding Shortfalls
According to the most recent deprivation measures (the Index of Multiple Deprivation) for UK local authorities, many participating urban areas were included in the most deprived in England.
- “Participating urban centers like several major towns rank in the top 30 across the country under the latest deprivation indices,” said the study.
“While only a single urban area is in the top 10 for deprived neighbourhoods countrywide, urban areas are far more likely to be in the worst-off 20% of the nation. The figures highlights the extent of difficulties facing local leaders across major urban centers in the next twelve months,” the report added.
“Local government leaders have been clear about the necessity for a fair and sustainable funding system that reflects and addresses the real levels of disadvantage and demand,” said Michael Mordey.
“Lacking this, councils will persist to face impossible choices around which vital provisions to fund, and which to reduce, to the detriment of their communities.”
A fifth of councils have reduced or weakened social care provision in the last year, the survey revealed.
