According to a recent study of local authorities, UK councils are planning to sell social clubs, sports centres, and retail spaces as they rely on a rapid disposal of properties to balance the books.
Increasing Financial Pressures Drive Asset Sales
The Key Cities Group for second-tier cities in England reported that six out of ten of councils are planning to dispose of properties to cover the escalating costs of social services for vulnerable individuals.
Local governments have previously come under fire for disposing of public land and land to shore up their finances, but they contend they must proceed to raise vital cash from property disposals or declare themselves bankrupt.
The group said that a high proportion of councils attempting to raise money from a fire sale of assets represented “a distinct shift from 2024, when the majority (six in ten) of local leaders stated they would focus on restructuring services and using savings to weather increasing financial challenges.”
Specific Cases of Proposed Disposals
One local authority in Kent said its asset disposal plan included the disposal of a shopping centre in Rainham and a community venue in another town to generate £20m over the next half-decade.
- A local golf course and commercial properties held in two English counties, which all generate rent for Medway council, will also be disposed of under the strategy.
Council Tax Increases and Wider Financial Strains
This research of councils in the key cities group, which covers Sunderland, Southampton, Gloucester and Salford, also found that over seven in ten of councils will have to raise council taxes next spring to address the rising cost of essential services, increased rates of homelessness, and a persistent accommodation deficit.
Medway council explained it will proceed with asset sales after sharp increases in the cost of children services, special educational needs and disability (Send) provision, adult social care, and temporary accommodation.
“We are adopting creative strategies but some of these take time to achieve both better provisions and financial savings,” said a council leader.
He added: “We face demographic pressures which will continue to add to the strains we have. As a unitary authority, we had a 91% cut in our central funding from 2010-24, which is very challenging.”
National Patterns and Forecasts
A survey of regional authorities this week also found council budgets being strained by the increasing figures of young people and older individuals requiring special educational assistance.
A network of councils projected that local shortfalls will hit £4.4bn a year by the end of the decade, as they struggle to manage increased demand.
Government officials have delayed scheduled changes to the Send system until next year after a policy document setting out those reforms has been postponed.
Deprivation and Funding Shortfalls
Based on the most recent indices of deprivation (IMD) covering English councils, many key cities members were included in the most disadvantaged in the country.
- “Member cities like several major towns place in the top 30 nationally under the latest IMD measures,” noted the study.
“Although only one key city is in the ten most deprived for disadvantaged communities nationally, urban areas are much more prone to be in the worst-off 20% of the nation. The figures highlights the scale of challenges confronting local leaders across key cities in the next twelve months,” the analysis concluded.
“Local government leaders have been clear about the need for a fair and sustainable funding system that accounts for and addresses the actual extent of deprivation and demand,” stated a council leader.
“Without this, local authorities will continue to face impossible choices around which essential services to allocate spend to, and which to cut, to the disadvantage of their residents.”
One in five of local authorities have cut or compromised social care provision in the last year, the study found.
