According to a latest poll of municipal councils, UK councils are planning to sell social clubs, athletic facilities, and shopping arcades as they rely on a fire sale of properties to balance the books.
Increasing Financial Pressures Drive Asset Sales
The Key Cities Group for major urban areas in England stated that 60% of local authorities are planning to sell assets to cover the escalating costs of adult and children’s social care.
Local governments have in the past faced criticism for disposing of public land and land to support their finances, but they contend they must continue to generate essential revenue from property disposals or face insolvency.
This coalition said that a significant number of authorities seeking 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 utilising savings to manage increasing financial challenges.”
Specific Examples of Proposed Sales
One local authority in southeast England announced its property management strategy included the disposal of a retail complex in Rainham and a social club in another town to generate £20m over five years.
- A local golf course and business parks owned in Worcestershire and Suffolk, which all generate rent for the authority, will also be sold under the strategy.
Council Tax Increases and Broader Financial Strains
The survey of councils in the key cities group, which covers several urban centers, further found that over seven in ten of councils will have to raise council taxes next April to cover the growing cost of core provisions, increased rates of homelessness, and a persistent housing shortage.
The authority explained it will proceed with asset sales after sharp increases in the cost of children services, special educational needs and disability (Send) provision, elderly and disability services, and short-term housing.
“We are adopting innovative approaches but certain measures require time to deliver both improved services and cost efficiency,” stated Vince Maple.
He added: “There are population challenges which will persist to increase the strains we have. As a local government body, we had a drastic reduction in our central funding from over the past decade, which is very challenging.”
National Patterns and Forecasts
A survey of county councils this week further found council budgets being strained by the increasing figures of young people and older individuals needing special educational assistance.
The County Councils Network said that local shortfalls will reach £4.4bn a year by the end of the decade, as they grapple to cope with increased demand.
Government officials have delayed planned reforms to the Send system until the coming year after a white paper outlining those reforms was recently delayed.
Deprivation and Funding Shortfalls
Based on the latest deprivation measures (the Index of Multiple Deprivation) for English councils, many participating urban areas were among the most disadvantaged in the country.
- “Participating urban centers like several major towns rank in the most deprived 30 nationally under the latest IMD measures,” said the report.
“While only one key city is in the top 10 for disadvantaged communities nationally, cities are much more prone to be in the most deprived fifth of England. The figures underscores the scale of challenges confronting municipal officials across key cities in the next twelve months,” the analysis added.
“Council officials have been clear about the necessity for a fair and sustainable funding system that reflects and responds to the real levels of deprivation and demand,” said Michael Mordey.
“Without this, local authorities will continue to face impossible choices around which essential services to fund, and which to reduce, to the disadvantage of their communities.”
One in five of local authorities have reduced or weakened care services in the past 12 months, the survey found.
