According to a recent study of municipal councils, UK councils are planning to offload social clubs, sports centres, and shopping arcades as they bet on a rapid disposal of properties to stabilize finances.
Growing Fiscal Pressures Drive Asset Sales
The Key Cities Group for second-tier cities in England stated that 60% of local authorities are planning to dispose of properties to meet the escalating costs of adult and children’s social care.
Councils have previously come under fire for disposing of public land and open spaces to support their budgets, but they argue they must continue to raise vital cash from asset sales or face insolvency.
This coalition said that a high proportion of councils seeking to generate funds from a fire sale of assets marked “a distinct shift from 2024, when the largest share (six in ten) of municipal officials stated they would prioritise restructuring services and utilising financial reserves to weather increasing financial challenges.”
Detailed Cases of Proposed Disposals
Medway Council in Kent announced its asset disposal plan included the disposal of a shopping centre in Rainham and a social club in another town to raise £20m over the next half-decade.
- Gillingham golf club and commercial properties owned in two English counties, which all generate rent for the authority, will also be disposed of under the strategy.
Council Tax Rises and Broader Fiscal Strains
The survey of councils in the key cities group, which includes several urban centers, also found that more than 70% of authorities will have to increase council taxes next April to address the rising cost of essential services, higher levels of housing insecurity, and a persistent housing shortage.
The authority explained it will press ahead with asset sales after sharp increases in the cost of youth support, support for vulnerable learners, elderly and disability services, and temporary accommodation.
“We are adopting innovative approaches but some of these take time to deliver both improved services and cost efficiency,” stated a council leader.
He continued: “We face demographic pressures which will continue to increase the strains we have. As a local government body, we had a 91% cut in our central funding from 2010-24, which is extremely difficult.”
National Patterns and Forecasts
Research of regional authorities this week also found council budgets being strained by the increasing figures of young people and adults needing Send support.
The County Councils Network said that council deficits will hit 4.4 billion pounds a year by the end of the decade, as they struggle to cope with increased demand.
Ministers have put off scheduled changes to the Send system until the coming year after a white paper setting out those changes was recently delayed.
Disadvantage and Financial Shortfalls
Based on the most recent deprivation measures (the Index of Multiple Deprivation) for UK local authorities, many key cities members were included in the most deprived in England.
- “Participating urban centers like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton rank in the top 30 nationally under the latest IMD measures,” said the study.
“While only one key city is among the top 10 for disadvantaged communities nationally, cities are far more likely to be in the most deprived fifth of the nation. The data underscores the extent of difficulties confronting municipal officials across major urban centers in the next twelve months,” the analysis added.
“Council officials have been explicit about the need for a fair and sustainable funding system that reflects and responds to the actual extent of deprivation and demand,” said Michael Mordey.
“Without this, local authorities will persist to face impossible choices around which essential services to allocate spend to, and which to cut, to the disadvantage of their residents.”
One in five of councils have cut or compromised care services in the last year, the study revealed.
