According to a recent survey of municipal councils, UK councils are planning to sell community centers, athletic facilities, and shopping arcades as they rely on a rapid disposal of assets to balance the books.
Growing Fiscal Challenges Drive Asset Sales
The Key Cities Group for second-tier cities 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 previously faced criticism for selling public land and land to shore up their finances, but they argue they must continue to raise vital cash 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 represented “a distinct shift from 2024, when the largest share (60%) of local leaders said they would prioritise service redesigns and utilising savings to manage increasing fiscal pressures.”
Specific Examples of Proposed Sales
One local authority in Kent announced its asset disposal plan featured the disposal of a shopping centre in Rainham and a social club in another town to raise 20 million pounds over five years.
- A local golf course and business parks held in Worcestershire and Suffolk, which all generate rent for the authority, will also be disposed of under the strategy.
Local Levy Increases and Wider Financial Pressures
This research of councils in the coalition, which includes Sunderland, Southampton, Gloucester and Salford, also found that over seven in ten of councils will need to increase local levies next April to cover the rising cost of core provisions, increased rates of housing insecurity, and a persistent housing shortage.
Medway council said it will proceed with property disposals after steep rises 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 require time to achieve both better provisions and cost efficiency,” said a council leader.
He continued: “We face demographic pressures which will continue 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 Patterns and Projections
Research of county councils this week also found local finances being strained by the increasing figures of children and older individuals needing Send support.
The County Councils Network projected that local shortfalls will hit 4.4 billion pounds a year by 2029, as they grapple to cope with increased demand.
Government officials have delayed planned reforms to the Send system until the coming year after a policy document setting out those reforms was recently delayed.
Deprivation and Financial Shortfalls
According to the most recent deprivation measures (the Index of Multiple Deprivation) for UK local authorities, several participating urban areas were among the most disadvantaged in England.
- “Participating urban centers like several major towns rank in the top 30 nationally under the latest deprivation indices,” noted the study.
“Although only a single urban area is in the ten most deprived for deprived neighbourhoods nationally, cities are much more prone to be in the worst-off 20% of the nation. The data underscores the extent of challenges facing municipal officials across key cities in the coming year,” the report concluded.
“Local government leaders have been clear about the necessity for a fair and sustainable funding system that reflects and addresses the real levels of deprivation and need,” said a council leader.
“Lacking this, local authorities will persist to face difficult decisions around which essential services to allocate spend to, and which to cut, to the disadvantage of their residents.”
A fifth of councils have cut or compromised care services in the past 12 months, the study revealed.
