Based on a latest poll of municipal councils, UK councils are preparing to sell community centers, athletic facilities, and shopping arcades as they rely on a fire sale of assets to balance the books.
Increasing Fiscal Challenges Prompt Asset Sales
The Key Cities Group representing second-tier cities in England stated that six out of ten of councils are planning to dispose of properties to cover the escalating costs of social services for vulnerable individuals.
Councils have previously faced criticism for disposing of playing fields and open spaces to support their budgets, but they contend they must continue to raise vital cash from asset sales or declare themselves bankrupt.
This coalition said that a significant number of councils seeking to generate funds from a fire sale of holdings marked “a distinct shift from 2024, when the majority (60%) of municipal officials said they would prioritise service redesigns and utilising savings to weather increasing financial challenges.”
Specific Examples of Proposed Sales
Medway Council in southeast England said its asset disposal plan included the disposal of a retail complex in Rainham and a community venue in Rochester to raise £20m over five years.
- Gillingham golf club and commercial properties held in two English counties, which all provide rental income for the authority, will also be disposed of under the plan.
Council Tax Rises and Broader Fiscal Strains
The survey of councils in the coalition, which includes several urban centers, further found that over seven in ten of authorities will need to raise local levies next spring to address the rising cost of essential services, increased rates of homelessness, and a longstanding housing shortage.
The authority said it will press ahead with asset sales after steep rises in the cost of children services, special educational needs and disability (Send) provision, elderly and disability services, and temporary accommodation.
“We are adopting creative strategies but some of these require time to deliver both improved services and cost efficiency,” stated Vince Maple.
He continued: “We face population challenges which will continue to increase the pressures we have. As a local government body, we had a 91% cut in our central funding from over the past decade, which is extremely difficult.”
Countrywide Trends and Projections
Research of county councils this week also found local finances being stretched by the increasing figures of children and adults requiring Send support.
A network of councils said that local shortfalls will reach 4.4 billion pounds a year by 2029, as they grapple to cope with increased demand.
Government officials have put off planned reforms to the Send system until next year after a white paper outlining those reforms was recently delayed.
Disadvantage and Funding Shortfalls
According to the latest deprivation measures (IMD) covering English councils, many participating urban areas were included in the most disadvantaged in England.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the most deprived 30 nationally under the latest IMD measures,” noted the report.
“Although only one key city is among the top 10 for disadvantaged communities countrywide, urban areas are much more prone to be in the most deprived fifth of England. The data highlights the scale of difficulties facing municipal officials across key cities in the coming year,” the report added.
“Local government leaders have been clear about the need for a equitable and lasting funding system that accounts for and addresses the actual extent of deprivation and need,” stated a council leader.
“Without this, local authorities will persist to face difficult decisions around which essential services to allocate spend to, and which to reduce, to the disadvantage of their communities.”
One in five of local authorities have cut or compromised social care provision in the last year, the survey found.
