According to a new survey of municipal councils, UK councils are preparing to offload social clubs, sports centres, and retail spaces as they rely on a fire sale of properties to stabilize finances.
Growing Fiscal Challenges Prompt Asset Sales
A coalition of councils representing second-tier cities in the UK stated that six out of ten of councils are planning to sell assets to cover the escalating costs of social services for vulnerable individuals.
Local governments have previously come under fire for disposing of public land and land to shore up their finances, but they argue they must proceed to raise vital cash from asset sales or declare themselves bankrupt.
The group noted that a significant number of councils seeking to raise money from a fire sale of assets marked “a distinct shift from 2024, when the largest share (60%) of local leaders said they would focus on restructuring services and utilising financial reserves to manage increasing financial challenges.”
Detailed Cases of Proposed Sales
Medway Council in southeast England announced its property management strategy featured the disposal of a shopping centre in a local town and a social club in Rochester to generate 20 million pounds over five years.
- Gillingham golf club and business parks held in two English counties, which all generate rent for the authority, will also be sold under the strategy.
Council Tax Increases and Wider Fiscal Pressures
This research of councils in the key cities group, which includes Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of authorities will need to increase local levies next April to cover the growing cost of essential services, increased rates of homelessness, and a longstanding accommodation deficit.
Medway council said it will proceed with asset sales after sharp increases in the cost of children services, support for vulnerable learners, adult social care, and temporary accommodation.
“We are taking innovative approaches but some of these take time to deliver both improved services and financial savings,” stated Vince Maple.
He continued: “We face demographic pressures which will persist to add to the strains we have. As a unitary authority, we had a 91% cut in our revenue support grant from 2010-24, which is very challenging.”
National Patterns and Forecasts
Research of county councils recently further found council budgets being stretched by the increasing figures of young people and adults requiring Send support.
A network of councils projected that local shortfalls will hit £4.4bn a year by the end of the decade, 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 setting out those changes was recently delayed.
Deprivation and Financial Shortfalls
According to the latest deprivation measures (the Index of Multiple Deprivation) for UK local authorities, several participating urban areas were included in the most deprived in England.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton rank in the most deprived 30 across the country under the latest IMD measures,” said the study.
“While only one key city is among the top 10 for deprived neighbourhoods nationally, cities are far more likely to be in the worst-off 20% of England. The figures underscores the extent of challenges facing local leaders across major urban centers in the coming year,” the report added.
“Council officials have been clear about the necessity for a fair and sustainable financial structure that reflects and responds to the real levels of disadvantage and need,” said Michael Mordey.
“Lacking this, local authorities will continue to face difficult decisions around which essential services to fund, and which to cut, to the disadvantage of their communities.”
One in five of councils have reduced or weakened care services in the past 12 months, the study found.
