Based on a recent survey of municipal councils, UK councils are preparing to sell social clubs, athletic facilities, and shopping arcades as they bet on a rapid disposal of properties to stabilize finances.
Growing Financial Challenges Prompt Asset Sales
The Key Cities Group for second-tier cities in the UK stated that 60% of local authorities are intending to sell assets to meet the rising costs of social services for vulnerable individuals.
Local governments have in the past faced criticism for disposing of playing fields and land to support their finances, but they contend they must proceed to generate essential revenue from asset sales or face insolvency.
The group noted that a significant number of councils attempting to generate funds from a quick sale of assets marked “a distinct shift from 2024, when the majority (six in ten) of local leaders stated they would focus on restructuring services and utilising financial reserves to weather increasing fiscal pressures.”
Detailed Examples of Planned Disposals
One local authority in southeast England said its asset disposal plan included the disposal of a shopping centre in a local town and a social club in Rochester 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 Rises and Wider Fiscal Pressures
The survey of councils in the coalition, which covers Sunderland, Southampton, Gloucester and Salford, also found that over seven in ten of authorities will need to increase council taxes next spring to cover the rising cost of core provisions, increased rates of housing insecurity, and a longstanding housing shortage.
The authority explained it will press ahead with asset sales after steep rises in the cost of children services, support for vulnerable learners, adult social care, and short-term housing.
“We are taking creative strategies but some of these require time to achieve both better provisions and financial savings,” said Vince Maple.
He continued: “We face demographic pressures which will continue to add to the pressures we have. As a unitary authority, we had a drastic reduction in our central funding from over the past decade, which is extremely difficult.”
Countrywide Patterns and Forecasts
Research of regional authorities recently further found council budgets being stretched by the increasing figures of children and adults requiring Send support.
The County Councils Network projected that local shortfalls will hit £4.4bn a year by the end of the decade, as they grapple to manage increased demand.
Ministers have put off scheduled changes to the Send system until next year after a white paper outlining those reforms was recently delayed.
Deprivation and Funding Gaps
Based on the most recent indices of deprivation (IMD) covering English councils, many participating urban areas were among the most disadvantaged in England.
- “Participating urban centers like several major towns place in the most deprived 30 across the country under the latest IMD measures,” said the study.
“Although only one key city is among the ten most deprived for disadvantaged communities nationally, urban areas are far more likely to be in the worst-off 20% of England. The figures highlights the scale of challenges confronting municipal officials across key cities in the next twelve months,” the report concluded.
“Council officials have been clear about the need for a fair and sustainable financial structure that accounts for and responds to the actual extent of disadvantage and demand,” said Michael Mordey.
“Lacking this, councils will continue to face impossible choices around which essential services to fund, and which to reduce, to the disadvantage of their residents.”
A fifth of councils have reduced or weakened care services in the past 12 months, the study found.
