Based on a recent study of municipal councils, English councils are preparing to offload social clubs, sports centres, and retail spaces as they rely on a fire sale of properties to stabilize finances.
Increasing Financial Challenges Drive Asset Sales
The Key Cities Group for major urban areas in the UK reported that six out of ten of local authorities are intending to sell assets to cover the escalating costs of adult and children’s social care.
Councils have previously come under fire for selling public land and land to support their budgets, but they contend they must continue to raise vital cash from property disposals or declare themselves bankrupt.
This coalition noted that a high proportion of councils attempting to raise money from a fire sale of holdings marked “a distinct shift from 2024, when the largest share (six in ten) of municipal officials stated they would prioritise service redesigns and utilising financial reserves to weather growing financial challenges.”
Detailed Examples of Planned Sales
One local authority in Kent announced its asset disposal plan included the disposal of a shopping centre in a local town and a community venue in Rochester to raise £20m over five years.
- Gillingham golf club and business parks held in Worcestershire and Suffolk, which all provide rental income for Medway council, will additionally be disposed of under the strategy.
Council Tax Rises and Wider Financial Pressures
This research of local authorities in the key cities group, which covers Sunderland, Southampton, Gloucester and Salford, also found that more than 70% of councils will need to increase council taxes next April to cover the growing cost of essential services, higher levels of homelessness, and a persistent housing shortage.
The authority explained it will proceed with property disposals after steep rises in the cost of youth support, special educational needs and disability (Send) provision, adult social care, and short-term housing.
“We are taking innovative approaches but some of these take time to achieve both better provisions and financial savings,” said Vince Maple.
He continued: “There are population challenges which will persist to increase the strains we have. As a local government body, we had a 91% cut in our revenue support grant from 2010-24, which is very challenging.”
Countrywide Trends and Forecasts
A survey of county councils recently further found council budgets being stretched by the increasing figures of young people and adults needing special educational assistance.
The County Councils Network said that council deficits will hit £4.4bn a year by 2029, 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.
Deprivation and Funding Gaps
Based on the most recent deprivation measures (IMD) for English councils, many participating urban areas were included in the most deprived in England.
- “Member cities like several major towns rank in the top 30 across the country under the latest deprivation indices,” said the report.
“Although only a single urban area is in the top 10 for disadvantaged communities nationally, urban areas are much more prone to be in the worst-off 20% of England. The figures underscores the extent of difficulties confronting municipal officials across key cities in the next twelve months,” the report concluded.
“Council officials have been explicit about the need for a fair and sustainable funding system that accounts for and responds to the real levels of deprivation and demand,” stated a council leader.
“Lacking this, councils will persist to face difficult decisions around which vital provisions to fund, and which to cut, to the detriment of their communities.”
One in five of councils have reduced or weakened care services in the last year, the study revealed.
