Based on a recent survey of local authorities, UK councils are preparing to offload community centers, sports centres, and shopping arcades as they rely on a fire sale of assets to stabilize finances.
Increasing Fiscal Challenges Drive Asset Sales
The Key Cities Group for second-tier cities in the UK stated that 60% of councils are intending to dispose of properties to cover the escalating costs of social services for vulnerable individuals.
Councils have previously come under fire for selling playing fields and land to support their finances, but they contend they must proceed to generate essential revenue from property disposals or face insolvency.
The group said that a significant number of councils attempting to generate funds from a fire sale of holdings marked “a distinct shift from 2024, when the largest share (six in ten) of municipal officials said they would focus on service redesigns and utilising savings to weather increasing financial challenges.”
Specific Cases of Proposed Disposals
One local authority in Kent said its property management strategy featured the disposal of a retail complex in a local town and a social club in another town to raise £20m over five years.
- A local golf course and business parks held in Worcestershire and Suffolk, which all provide rental income for the authority, will also be disposed of under the strategy.
Council Tax Increases and Broader Fiscal Strains
This research of councils in the coalition, which includes Sunderland, Southampton, Gloucester and Salford, further found that over seven in ten of councils will have to increase local levies next April to cover the rising cost of core provisions, higher levels of homelessness, and a longstanding housing shortage.
Medway council said it will press ahead with property disposals after steep rises in the cost of children services, support for vulnerable learners, adult social care, and temporary accommodation.
“We are adopting creative strategies but some of these require time to achieve both improved services and financial savings,” said a council leader.
He continued: “We face population challenges which will persist to add to the strains we have. As a unitary authority, we had a drastic reduction in our revenue support grant from over the past decade, which is extremely difficult.”
National Patterns and Forecasts
Research of regional authorities this week also found council budgets being stretched by the growing number of children and adults requiring special educational assistance.
The County Councils Network said that local shortfalls will hit £4.4bn a year by 2029, as they struggle to cope with rising needs.
Government officials have put off scheduled changes to the Send system until next year after a policy document setting out those reforms was recently delayed.
Deprivation and Funding Shortfalls
Based on the most recent deprivation measures (IMD) covering English councils, many key cities members were among the most disadvantaged in England.
- “Member cities like several major towns place in the most deprived 30 nationally under the latest deprivation indices,” said the report.
“While only a single urban area is among the top 10 for deprived neighbourhoods countrywide, urban areas are far more likely to be in the worst-off 20% of England. The data underscores the scale of challenges facing municipal officials across key cities in the next twelve months,” the report concluded.
“Local government leaders have been clear about the necessity for a fair and sustainable funding system that accounts for and addresses the real levels of disadvantage and need,” said Michael Mordey.
“Lacking this, councils will continue to face difficult decisions around which essential services to allocate spend to, and which to cut, to the disadvantage of their residents.”
One in five of councils have reduced or weakened social care provision in the last year, the survey found.
