Based on a latest study of local authorities, UK councils are preparing to offload community centers, sports centres, and shopping arcades as they rely on a fire sale of properties to balance the books.
Increasing Financial Pressures Prompt Asset Sales
The Key Cities Group representing major urban areas in England stated that six out of ten of councils are planning to dispose of properties to cover the escalating costs of adult and children’s social care.
Councils have previously come under fire for disposing of playing fields and land to support their budgets, but they argue they must continue to generate essential revenue from asset sales or declare themselves bankrupt.
This coalition said that a high proportion of councils attempting to raise money from a fire sale of holdings represented “a distinct shift from 2024, when the largest share (six in ten) of local leaders said they would prioritise restructuring services and utilising financial reserves to manage growing financial challenges.”
Detailed Cases of Planned Disposals
One local authority in Kent announced its asset disposal plan included the disposal of a retail complex in a local town and a social club in Rochester to generate £20m over five years.
- Gillingham golf club and business parks held in Worcestershire and Suffolk, which all generate rent for Medway council, will also be sold under the strategy.
Local Levy Increases and Wider Financial Pressures
This research of local authorities in the key cities group, which includes Sunderland, Southampton, Gloucester and Salford, also found that more than 70% of authorities will have to raise council taxes next April to address the rising cost of core provisions, higher levels of housing insecurity, and a persistent housing shortage.
The authority explained it will proceed with property disposals after sharp increases in the cost of youth support, special educational needs and disability (Send) provision, elderly and disability services, and temporary accommodation.
“We are taking creative strategies but some of these take time to deliver both improved services and financial savings,” stated a council leader.
He added: “There are population challenges which will continue to increase 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 extremely difficult.”
Countrywide Trends and Projections
Research of county councils recently also found council budgets being strained by the growing number of children and older individuals needing Send support.
The County Councils Network said that local shortfalls will hit 4.4 billion pounds a year by the end of the decade, as they grapple to manage increased demand.
Government officials have put off planned reforms to the Send system until the coming year after a white paper setting out those reforms was recently delayed.
Deprivation and Funding Gaps
Based on the latest indices of deprivation (IMD) for English councils, several key cities members were among the most deprived in the country.
- “Member cities like several major towns rank in the top 30 nationally under the latest IMD measures,” noted the study.
“Although only a single urban area is among the top 10 for disadvantaged communities nationally, cities are much more prone to be in the worst-off 20% of the nation. The data highlights the scale of difficulties confronting local leaders 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 responds to the actual extent of disadvantage and need,” said Michael Mordey.
“Lacking this, councils will continue to face impossible choices around which vital provisions to fund, and which to cut, to the detriment of their communities.”
A fifth of councils have cut or compromised social care provision in the past 12 months, the study revealed.
