According to a latest survey of municipal councils, UK councils are preparing to offload social clubs, athletic facilities, and shopping arcades as they bet on a fire sale of assets to stabilize finances.
Increasing Financial Challenges Prompt Asset Sales
The Key Cities Group representing major urban areas in England stated that six out of ten of councils are intending to dispose of properties to cover the rising costs of social services for vulnerable individuals.
Councils have previously come under fire for selling public land and open spaces to support their budgets, but they argue they must proceed to generate essential revenue from asset sales or face insolvency.
The group said that a high proportion of authorities seeking to generate funds from a quick sale of holdings marked “a distinct shift from 2024, when the majority (60%) of municipal officials stated they would prioritise restructuring services and utilising financial reserves to weather increasing fiscal pressures.”
Detailed Examples of Proposed Disposals
One local authority in Kent announced its asset disposal plan included the disposal of a retail complex in a local town and a community venue in another town to generate £20m over five years.
- Gillingham golf club and commercial properties owned in two English counties, which all generate rent for the authority, will also be disposed of under the strategy.
Council Tax Rises and Wider Fiscal Pressures
This research of councils in the coalition, which covers several urban centers, further found that more than 70% of authorities will have to increase council taxes next April to address the rising cost of essential services, increased rates of housing insecurity, and a persistent housing shortage.
Medway council said it will proceed with asset sales after steep rises in the cost of children services, support for vulnerable learners, elderly and disability services, and short-term housing.
“We are adopting creative strategies but some of these require time to deliver both improved services and cost efficiency,” stated a council leader.
He added: “We face demographic pressures which will persist 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 very challenging.”
Countrywide Trends and Projections
A survey of regional authorities recently further found council budgets being strained by the increasing figures of young people and older individuals needing special educational assistance.
A network of councils said that local shortfalls will hit £4.4bn a year by the end of the decade, as they grapple to manage increased demand.
Ministers have delayed scheduled changes to the special educational needs framework until next year after a white paper outlining those reforms was recently delayed.
Disadvantage and Funding Shortfalls
Based on the latest indices of deprivation (the Index of Multiple Deprivation) for English councils, many participating urban areas were included in the most disadvantaged in England.
- “Participating urban centers like several major towns place in the top 30 nationally under the latest deprivation indices,” said the study.
“While only a single urban area is in the ten most deprived for disadvantaged communities nationally, cities are much more prone to be in the most deprived fifth of the nation. The figures underscores the extent of difficulties facing local leaders across major urban centers in the coming year,” the report added.
“Council officials have been clear about the need for a equitable and lasting funding system that reflects and responds to the real levels of deprivation and demand,” said Michael Mordey.
“Without this, councils will continue to face impossible choices around which essential services to allocate spend to, and which to cut, to the disadvantage of their residents.”
A fifth of local authorities have reduced or weakened care services in the last year, the survey revealed.
