According to a new study of municipal councils, UK councils are planning to offload community centers, sports centres, and shopping arcades as they rely on a fire sale of assets to balance the books.
Growing Financial Pressures Prompt Asset Sales
The Key Cities Group representing second-tier cities in the UK reported that 60% of local authorities are planning to dispose of properties to cover the rising costs of adult and children’s social care.
Councils have in the past come under fire for disposing of playing fields and land to shore up their finances, but they contend they must proceed to raise vital cash from property disposals or face insolvency.
The group said that a significant number of authorities seeking to generate funds from a fire sale of assets marked “a distinct shift from 2024, when the majority (60%) of local leaders stated they would prioritise restructuring services and utilising financial reserves to manage growing financial challenges.”
Specific Examples of Proposed Disposals
One local authority in southeast England announced its property management strategy included the sale 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 held in two English counties, which all generate rent for Medway council, will also be disposed of under the strategy.
Local Levy Increases and Broader Fiscal Strains
This research of councils in the key cities group, which covers several urban centers, further found that more than 70% of councils will have to raise council taxes next April to cover the rising cost of core provisions, increased rates of homelessness, and a longstanding accommodation deficit.
Medway council explained it will proceed with asset sales after steep rises in the cost of youth support, special educational needs and disability (Send) provision, adult social care, and temporary accommodation.
“We are taking innovative approaches but some of these require time to deliver both better provisions and cost efficiency,” said Vince Maple.
He added: “We face 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.”
Countrywide Patterns and Projections
A survey of county councils this week also found council budgets being stretched by the increasing figures of young people and older individuals requiring Send support.
A network of councils projected that local shortfalls will reach 4.4 billion pounds a year by 2029, as they struggle to manage increased demand.
Ministers have put off planned reforms to the Send system until the coming year after a policy document outlining those reforms was recently delayed.
Disadvantage and Funding Gaps
Based on the latest deprivation measures (the Index of Multiple Deprivation) covering UK local authorities, many key cities members were included in the most deprived in the country.
- “Member cities like several major towns place in the most deprived 30 nationally under the latest IMD measures,” said the study.
“Although only a single urban area is among the top 10 for disadvantaged communities nationally, urban areas are far more likely to be in the most deprived fifth of England. The figures highlights the extent of challenges facing municipal officials across key cities in the next twelve months,” the analysis concluded.
“Council officials have been clear about the need for a fair and sustainable financial structure that reflects and addresses the real levels of disadvantage and need,” said Michael Mordey.
“Lacking this, local authorities will persist to face impossible choices around which vital provisions to fund, and which to reduce, to the detriment of their communities.”
A fifth of local authorities have cut or compromised social care provision in the last year, the study revealed.
