Based on a recent survey of municipal councils, UK councils are planning to sell social clubs, athletic facilities, and shopping arcades as they rely on a fire sale of assets to stabilize finances.
Increasing Financial Pressures Drive Asset Sales
A coalition of councils for second-tier cities in the UK stated that six out of ten of councils are intending to dispose of properties to cover the rising costs of adult and children’s social care.
Councils have previously come under fire for disposing of playing fields and land to support their finances, but they contend they must proceed to raise vital cash from asset sales or declare themselves bankrupt.
The group noted that a significant number of councils attempting to generate funds from a quick sale of holdings marked “a clear change from 2024, when the majority (six in ten) of municipal officials said they would prioritise service redesigns and using financial reserves to weather growing fiscal pressures.”
Specific Examples of Planned Disposals
One local authority in southeast England said its asset disposal plan featured the disposal of a shopping centre in Rainham and a social club in Rochester to generate £20m over the next half-decade.
- A local golf course and business parks owned in two English counties, which all provide rental income for the authority, will also be sold under the strategy.
Local Levy Rises and Broader Financial Pressures
The survey of local authorities in the key cities group, which covers Sunderland, Southampton, Gloucester and Salford, further found that over seven in ten of councils will have to raise local levies next April to cover the rising cost of core provisions, higher levels of homelessness, and a longstanding housing shortage.
Medway council explained it will press ahead with asset sales after steep rises in the cost of children services, support for vulnerable learners, adult social care, and short-term housing.
“We are adopting innovative approaches but some of these take time to deliver both better provisions and cost efficiency,” said Vince Maple.
He added: “We face demographic pressures which will continue to add to the pressures 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.”
National Trends and Forecasts
Research of regional authorities recently also found council budgets being stretched by the growing number of young people and older individuals needing special educational assistance.
A network of councils projected that council deficits will hit £4.4bn a year by 2029, as they grapple to manage increased demand.
Government officials have put off planned reforms to the Send system until the coming year after a policy document outlining those reforms was recently delayed.
Deprivation and Funding Shortfalls
Based on the most recent deprivation measures (IMD) covering UK local authorities, many participating urban areas were among the most deprived in England.
- “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 in the top 10 for disadvantaged communities countrywide, urban areas are far more likely to be in the most deprived fifth of England. The figures highlights the extent of challenges facing local leaders across key cities in the coming year,” the analysis concluded.
“Local government leaders have been clear about the necessity for a equitable and lasting financial structure that reflects and addresses the actual extent of disadvantage and need,” said a council leader.
“Without this, councils will continue to face impossible choices around which vital provisions to fund, and which to reduce, to the detriment of their communities.”
A fifth of councils have cut or compromised care services in the past 12 months, the study revealed.
