Based on a recent study of municipal councils, UK councils are preparing to offload social clubs, sports centres, and shopping arcades as they rely on a fire sale of assets to stabilize finances.
Increasing Fiscal Challenges 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 public land and land to support their finances, but they contend they must continue to generate essential revenue from asset sales or declare themselves bankrupt.
This coalition said that a high proportion of councils seeking to raise money from a fire sale of holdings marked “a distinct shift from 2024, when the majority (six in ten) of local leaders said they would prioritise service redesigns and utilising financial reserves to weather increasing financial challenges.”
Specific Cases of Planned Sales
One local authority in southeast England said its asset disposal plan included the disposal of a retail complex in Rainham and a social club in another town to raise £20m over the next half-decade.
- Gillingham golf club and commercial properties held in two English counties, which all provide rental income for Medway council, will also be sold under the plan.
Council Tax Rises and Wider Fiscal Strains
The survey of councils in the coalition, which includes several urban centers, also found that more than 70% of councils will need to raise council taxes next spring to cover the rising cost of core provisions, higher levels of housing insecurity, and a persistent accommodation deficit.
Medway council 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 short-term housing.
“We are taking creative strategies but certain measures take time to deliver both improved services and cost efficiency,” said a council leader.
He added: “We face population challenges which will persist to increase 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 very challenging.”
National Patterns and Forecasts
A survey of county councils this week further found local finances being stretched by the increasing figures of children and older individuals needing special educational assistance.
The County Councils Network said that council deficits will reach £4.4bn a year by 2029, as they struggle to cope with rising needs.
Ministers have put off planned reforms to the special educational needs framework until next year after a white paper outlining those changes was recently delayed.
Deprivation and Financial Gaps
Based on the latest deprivation measures (the Index of Multiple Deprivation) covering UK local authorities, many key cities members were among the most deprived in the country.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton rank in the most deprived 30 nationally under the latest IMD measures,” noted the report.
“Although only one key city is among the ten most deprived for disadvantaged communities nationally, cities are much more prone to be in the worst-off 20% of the nation. The figures underscores the extent of difficulties facing municipal officials across key cities in the next twelve months,” the analysis concluded.
“Council officials have been explicit about the necessity for a equitable and lasting funding system that accounts for and responds to the actual extent of disadvantage and need,” stated a council leader.
“Without this, local authorities will persist to face difficult decisions around which vital provisions to fund, and which to cut, to the detriment of their residents.”
One in five of councils have reduced or weakened care services in the past 12 months, the study revealed.
