Based on a new poll of municipal councils, UK councils are planning to sell community centers, athletic facilities, and retail spaces as they rely on a fire sale of assets to stabilize finances.
Increasing Fiscal Challenges Drive Asset Sales
The Key Cities Group representing second-tier cities in the UK reported that six out of ten of councils are intending to dispose of properties to meet the escalating costs of adult and children’s social care.
Local governments have previously come under fire for disposing of playing fields and open spaces to shore up their budgets, but they argue they must proceed to generate essential revenue from property disposals or declare themselves bankrupt.
The group said that a high proportion of councils attempting to raise money from a fire sale of assets marked “a distinct shift from 2024, when the largest share (60%) of municipal officials stated they would focus on restructuring services and using savings to manage increasing financial challenges.”
Specific Examples of Proposed Disposals
One local authority in southeast England announced its asset disposal plan included the sale of a retail complex in a local town and a community venue in Rochester to generate 20 million pounds over the next half-decade.
- Gillingham golf club and commercial properties owned in Worcestershire and Suffolk, which all generate rent for Medway council, will also be sold under the plan.
Local Levy Increases and Wider Fiscal Strains
The survey of local authorities in the coalition, which includes several urban centers, also found that over seven in ten of authorities will need to raise local levies next spring to cover the growing cost of core provisions, increased rates of homelessness, and a longstanding accommodation deficit.
Medway council said it will press ahead with property disposals after steep rises in the cost of youth support, support for vulnerable learners, elderly and disability services, and temporary accommodation.
“We are adopting creative strategies but certain measures require time to deliver both better provisions and cost efficiency,” said Vince Maple.
He added: “There are population challenges which will persist to add to the pressures we have. As a unitary authority, we had a 91% cut in our revenue support grant from over the past decade, which is very challenging.”
National Patterns and Projections
A survey of county councils this week further found council budgets being stretched by the increasing figures of children and adults requiring Send support.
The County Councils Network projected that council deficits will reach £4.4bn a year by the end of the decade, as they grapple to manage rising needs.
Government officials have put off scheduled changes to the Send system until next year after a policy document outlining those changes has been postponed.
Disadvantage and Funding Shortfalls
Based on the most recent indices of deprivation (the Index of Multiple Deprivation) covering UK local authorities, several key cities members were included in the most disadvantaged in England.
- “Member cities like several major towns place in the top 30 across the country under the latest IMD measures,” said the study.
“Although only one key city is among the top 10 for deprived neighbourhoods countrywide, cities are far more likely to be in the worst-off 20% of England. The figures underscores the extent of challenges confronting municipal officials across major urban centers in the next twelve months,” the analysis added.
“Council officials have been explicit about the necessity for a equitable and lasting funding system that accounts for and responds to the actual extent of deprivation and demand,” said Michael Mordey.
“Lacking this, local authorities will persist to face impossible choices around which vital provisions to allocate spend to, and which to cut, to the detriment of their residents.”
One in five of councils have cut or compromised social care provision in the last year, the survey revealed.
