According to a recent study of municipal councils, UK councils are preparing to sell social clubs, sports centres, and shopping arcades as they rely on a rapid disposal of properties to balance the books.
Growing Financial Pressures Prompt Asset Sales
A coalition of councils for second-tier cities in the UK reported that six out of ten of councils are planning to dispose of properties to meet the escalating costs of adult and children’s social care.
Local governments have in the past come under fire for disposing of playing fields and land to shore up their finances, but they argue they must continue to generate essential revenue from asset sales or declare themselves bankrupt.
The group noted that a high proportion of authorities attempting to raise money from a quick sale of holdings marked “a distinct shift from 2024, when the largest share (six in ten) of local leaders said they would focus on restructuring services and using financial reserves to manage growing financial challenges.”
Specific Examples of Planned Sales
Medway Council in Kent said its property management strategy featured the sale of a shopping centre in a local town and a community venue in another town to raise £20m over five years.
- A local golf course and commercial properties owned in Worcestershire and Suffolk, which all generate rent for Medway council, will additionally be sold under the strategy.
Local Levy Increases and Broader Fiscal Strains
This research of local authorities in the key cities group, which includes Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of authorities will need to raise local levies next April to address the rising cost of essential services, increased rates of homelessness, and a persistent housing shortage.
The authority said it will press ahead with asset sales after sharp increases in the cost of children services, special educational needs and disability (Send) provision, adult social care, and short-term housing.
“We are adopting innovative approaches but certain measures take time to deliver both better provisions and cost efficiency,” stated a council leader.
He continued: “There are demographic pressures which will continue to add to the pressures we have. As a unitary authority, we had a drastic reduction in our revenue support grant from 2010-24, which is extremely difficult.”
Countrywide Trends and Forecasts
Research of regional authorities this week also found local finances being stretched by the growing number of young people and older individuals requiring Send support.
The County Councils Network projected that local shortfalls will hit 4.4 billion pounds a year by 2029, as they struggle to manage increased demand.
Government officials have put off planned reforms to the special educational needs framework until next year after a white paper outlining those reforms has been postponed.
Disadvantage and Financial Shortfalls
According to the most recent deprivation measures (IMD) for UK local authorities, several participating urban areas were among the most disadvantaged in England.
- “Participating urban centers like several major towns place in the most deprived 30 nationally under the latest deprivation indices,” said the report.
“Although only a single urban area is in the ten most deprived for deprived neighbourhoods nationally, urban areas are much more prone to be in the most deprived fifth of the nation. The data underscores the extent of challenges facing municipal officials across major urban centers in the coming year,” the report added.
“Council officials have been explicit about the need for a fair and sustainable financial structure that reflects and responds to the real levels of disadvantage and demand,” said Michael Mordey.
“Lacking this, local authorities will persist to face difficult decisions around which essential services to allocate spend to, and which to cut, to the detriment of their residents.”
One in five of local authorities have cut or compromised care services in the past 12 months, the study revealed.
