According to a recent study of local authorities, UK councils are planning to sell social clubs, sports centres, and retail spaces as they bet on a fire sale of assets to balance the books.
Increasing Financial Challenges Prompt Asset Sales
The Key Cities Group for second-tier cities in England stated that six out of ten of local authorities are intending to dispose of properties to cover the escalating costs of adult and children’s social care.
Councils have in the past come under fire for disposing of public land and open spaces to support their budgets, but they argue they must continue to generate essential revenue from property disposals or face insolvency.
The group noted that a significant number of authorities seeking to generate funds from a fire sale of holdings represented “a clear change from 2024, when the majority (six in ten) of municipal officials stated they would focus on service redesigns and utilising savings to weather increasing fiscal pressures.”
Detailed Examples of Planned Disposals
Medway Council in Kent announced 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.
- A local golf course and commercial properties owned in Worcestershire and Suffolk, which all provide rental income for Medway council, will also be sold under the strategy.
Council Tax Increases and Wider Financial Pressures
The survey of councils in the coalition, which covers Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of councils will have to raise local levies next April to cover the rising cost of core provisions, higher levels of housing insecurity, and a longstanding accommodation deficit.
The authority said it will press ahead with property disposals after steep rises in the cost of children services, support for vulnerable learners, elderly and disability services, and temporary accommodation.
“We are taking innovative approaches but some of these take time to deliver both improved services and cost efficiency,” stated a council leader.
He added: “There are demographic pressures which will continue to increase the pressures we have. As a local government body, we had a drastic reduction in our revenue support grant from over the past decade, which is extremely difficult.”
National Patterns and Projections
Research of regional authorities recently also found council budgets being strained by the increasing figures of children and older individuals needing special educational assistance.
A network of councils projected that council deficits will hit £4.4bn a year by the end of the decade, as they grapple to manage increased demand.
Ministers have delayed planned reforms to the Send system until next year after a white paper setting out those reforms was recently delayed.
Deprivation and Funding Gaps
According to the latest indices of deprivation (IMD) for English councils, many key cities members were included in the most deprived in the country.
- “Participating urban centers like several major towns place in the most deprived 30 across the country under the latest deprivation indices,” said the study.
“While only a single urban area is among the ten most deprived for deprived neighbourhoods countrywide, urban areas are far more likely to be in the worst-off 20% of the nation. The data highlights the extent of difficulties confronting local leaders across major urban centers in the next twelve months,” the report concluded.
“Local government leaders have been clear about the necessity for a fair and sustainable financial structure that reflects and addresses the actual extent of disadvantage and demand,” stated a council leader.
“Lacking this, local authorities will continue to face difficult decisions around which essential services to fund, and which to reduce, to the disadvantage of their communities.”
A fifth of local authorities have reduced or weakened social care provision in the last year, the study revealed.
