Based on a new study of municipal councils, UK councils are planning to offload community centers, athletic facilities, and retail spaces as they bet on a fire sale of assets to stabilize finances.
Growing Financial Pressures Drive Asset Sales
The Key Cities Group representing second-tier cities in England reported that six out of ten of local authorities are planning to sell assets to meet the escalating costs of adult and children’s social care.
Councils have in the past faced criticism for disposing of public land and land to shore up their finances, but they contend they must continue to generate essential revenue from asset sales or face insolvency.
This coalition said that a significant number of councils attempting to generate funds from a quick sale of holdings represented “a distinct shift from 2024, when the majority (60%) of local leaders stated they would focus on service redesigns and utilising savings to manage increasing financial challenges.”
Specific Examples of Planned Sales
Medway Council in southeast England said its asset disposal plan featured the disposal of a retail complex in a local town and a social club in Rochester to raise £20m over five years.
- Gillingham golf club and business parks owned in two English counties, which all generate rent for the authority, will also be disposed of under the strategy.
Council Tax Increases and Broader Fiscal Pressures
The survey of local authorities in the coalition, which covers Sunderland, Southampton, Gloucester and Salford, also found that more than 70% of councils will need to raise local levies next spring to address the growing cost of core provisions, higher levels of housing insecurity, and a longstanding accommodation deficit.
The authority said it will press ahead with asset sales 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 some of these take time to achieve both improved services and financial savings,” said a council leader.
He added: “We face population challenges which will continue to add to the pressures we have. As a local government body, we had a 91% cut in our central funding from 2010-24, which is extremely difficult.”
National Patterns and Projections
A survey of county councils this week also found local finances being strained by the increasing figures of children and older individuals needing Send support.
The County Councils Network projected that local shortfalls will reach £4.4bn a year by the end of the decade, as they struggle to cope with increased demand.
Government officials have put off scheduled changes to the special educational needs framework until next year after a white paper setting out those changes 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 included in the most disadvantaged in England.
- “Member cities like several major towns rank in the most deprived 30 nationally under the latest deprivation indices,” noted the report.
“While only a single urban area is in the ten most deprived for disadvantaged communities nationally, urban areas are much more prone to be in the most deprived fifth of the nation. The data highlights the extent of difficulties confronting local leaders across major urban centers in the next twelve months,” the analysis concluded.
“Council officials have been explicit about the necessity for a fair and sustainable financial structure that reflects and addresses the actual extent of deprivation and demand,” said Michael Mordey.
“Lacking this, local authorities will persist to face impossible choices around which essential services to fund, and which to reduce, to the detriment of their residents.”
A fifth of councils have reduced or weakened social care provision in the last year, the study found.