Based on a new survey 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 Fiscal Challenges Drive Asset Sales
The Key Cities Group representing second-tier cities in England stated that 60% of councils are planning to dispose of properties to meet the rising costs of social services for vulnerable individuals.
Councils have in the past faced criticism for selling playing fields and land to shore up their finances, but they contend they must continue to generate essential revenue from property disposals or declare themselves bankrupt.
The group said that a significant number of councils attempting to raise money from a fire sale of assets marked “a clear change from 2024, when the majority (60%) of local leaders stated they would focus on restructuring services and utilising financial reserves to weather increasing financial challenges.”
Specific Cases of Proposed Disposals
Medway Council in southeast England said its property management strategy included 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 commercial properties owned in two English counties, which all provide rental income for Medway council, will additionally be disposed of under the strategy.
Council Tax Rises and Broader Financial Pressures
The survey of councils in the coalition, which includes several urban centers, also found that more than 70% of authorities will have to raise local levies next spring to address the growing cost of core provisions, increased rates of homelessness, and a longstanding accommodation deficit.
The authority said it will press ahead with property disposals 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 taking creative strategies but certain measures take time to achieve both improved services and cost efficiency,” said Vince Maple.
He added: “There are demographic pressures which will continue to add to the pressures we have. As a local government body, we had a drastic reduction in our central funding from over the past decade, which is extremely difficult.”
National Trends and Projections
Research of county councils this week further found council budgets being strained by the increasing figures of children and adults requiring Send support.
A network of councils said that council deficits will hit £4.4bn a year by the end of the decade, as they struggle to manage rising needs.
Government officials have delayed scheduled changes to the special educational needs framework until next year after a policy document setting out those reforms was recently delayed.
Disadvantage and Financial Shortfalls
According to the most recent indices of deprivation (the Index of Multiple Deprivation) covering UK local authorities, many participating urban areas were among the most deprived in the country.
- “Member cities like several major towns rank in the top 30 across the country under the latest IMD measures,” noted the study.
“Although only one key city is in the ten most deprived for disadvantaged communities nationally, urban areas are far more likely to be in the worst-off 20% of England. The figures underscores the scale of challenges confronting municipal officials across key cities in the coming year,” the analysis added.
“Council officials have been clear about the necessity for a fair and sustainable financial structure that accounts for and responds to the real levels of disadvantage and demand,” stated Michael Mordey.
“Without this, local authorities will continue to face difficult decisions around which essential services to fund, and which to cut, to the detriment of their residents.”
One in five of councils have cut or compromised care services in the past 12 months, the study found.
