Based on a recent study of local authorities, UK councils are preparing to sell community centers, athletic facilities, and retail spaces as they rely on a fire sale of assets to balance the books.
Growing Financial Challenges Drive Asset Sales
The Key Cities Group representing second-tier cities in England stated that six out of ten of local authorities are planning to dispose of properties to cover the rising costs of adult and children’s social care.
Local governments have in the past faced criticism for disposing of playing fields and open spaces to shore up their budgets, but they contend they must continue to raise vital cash from asset sales or declare themselves bankrupt.
The group said that a significant number of authorities seeking to raise money from a quick sale of holdings represented “a distinct shift from 2024, when the largest share (60%) of local leaders stated they would prioritise service redesigns and using financial reserves to weather growing fiscal pressures.”
Specific Cases 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 another town to generate 20 million pounds over five years.
- Gillingham golf club and commercial properties held in Worcestershire and Suffolk, which all provide rental income for the authority, will additionally be sold under the plan.
Council Tax Rises and Wider Financial Pressures
The survey of local authorities in the key cities group, which covers several urban centers, further found that over seven in ten of councils will need to increase council taxes next April to cover the growing cost of core provisions, higher levels of homelessness, and a longstanding housing shortage.
Medway council said it will proceed with asset sales after sharp increases 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,” stated Vince Maple.
He added: “We face population challenges which will persist to add to the strains we have. As a local government body, we had a 91% cut in our revenue support grant from over the past decade, which is very challenging.”
Countrywide Trends and Forecasts
A survey of county councils recently also found council budgets being stretched by the increasing figures of young people and adults needing special educational assistance.
A network of councils said that council deficits will reach £4.4bn a year by 2029, as they grapple to manage rising needs.
Ministers have delayed planned reforms to the special educational needs framework until next year after a white paper setting out those changes was recently delayed.
Disadvantage and Funding Gaps
According to the most recent deprivation measures (the Index of Multiple Deprivation) for English councils, many key cities members were included in the most deprived in England.
- “Member cities like several major towns rank in the most deprived 30 across the country under the latest deprivation indices,” noted the study.
“Although only one key city is in the ten most deprived for deprived neighbourhoods nationally, urban areas are far more likely to be in the worst-off 20% of the nation. The figures highlights the scale of difficulties confronting municipal officials across key cities in the next twelve months,” the report added.
“Council officials have been clear about the necessity for a fair and sustainable financial structure that reflects and addresses the real levels of deprivation and demand,” stated Michael Mordey.
“Without this, local authorities will continue to face difficult decisions around which vital provisions to fund, and which to reduce, to the detriment of their residents.”
A fifth of local authorities have reduced or weakened care services in the past 12 months, the study revealed.
