Based on a latest survey of municipal councils, English councils are preparing to offload community centers, sports centres, and retail spaces as they rely on a fire sale of assets to stabilize finances.
Increasing Fiscal Pressures Prompt Asset Sales
The Key Cities Group representing second-tier cities in the UK reported that six out of ten of local authorities are planning to dispose of properties to cover the escalating costs of social services for vulnerable individuals.
Local governments have previously come under fire for disposing of public land and open spaces to shore up their budgets, but they contend they must continue to raise vital cash from property disposals or face insolvency.
The group noted that a significant number of councils attempting to generate funds from a quick sale of assets represented “a distinct shift from 2024, when the majority (60%) of local leaders stated they would prioritise restructuring services and using financial reserves to weather increasing fiscal pressures.”
Specific Examples of Proposed Disposals
One local authority in southeast England announced its property management strategy included the disposal of a retail complex in a local town and a social club in Rochester to generate 20 million pounds over the next half-decade.
- Gillingham golf club and business parks held in Worcestershire and Suffolk, which all provide rental income for the authority, will also be sold under the plan.
Council Tax Increases and Wider Fiscal Strains
The survey of councils in the coalition, which includes Sunderland, Southampton, Gloucester and Salford, also found that over seven in ten of councils will need to raise council taxes next April to cover the growing cost of essential services, increased rates of homelessness, and a longstanding accommodation deficit.
The authority explained 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 taking creative strategies but some of these require time to achieve both better provisions and cost efficiency,” said a council leader.
He continued: “We face population challenges which will persist to add to the strains we have. As a local government body, we had a drastic reduction in our central funding from over the past decade, which is very challenging.”
Countrywide Patterns and Forecasts
A survey of county councils this week also found local finances being stretched by the growing number of children and adults needing special educational assistance.
The County Councils Network projected that local shortfalls will hit 4.4 billion pounds a year by the end of the decade, as they grapple to manage increased demand.
Ministers have put off planned reforms to the special educational needs framework until next year after a policy document setting out those changes was recently delayed.
Disadvantage and Financial Shortfalls
Based on the latest deprivation measures (the Index of Multiple Deprivation) for English councils, several key cities members were included in the most deprived in England.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the most deprived 30 across the country under the latest IMD measures,” noted the study.
“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 figures underscores the extent of challenges facing municipal officials across major urban centers in the coming year,” the analysis added.
“Council officials have been explicit about the need for a fair and sustainable funding system that reflects and addresses the real levels of disadvantage and demand,” said Michael Mordey.
“Without this, councils will continue to face difficult decisions around which essential services to fund, and which to reduce, to the detriment of their communities.”
A fifth of local authorities have cut or compromised care services in the past 12 months, the survey revealed.
