Based on a recent study of municipal councils, English councils are planning to sell social clubs, athletic facilities, and shopping arcades as they bet on a fire sale of properties to balance the books.
Growing Financial Challenges Prompt Asset Sales
A coalition of councils representing second-tier cities in England reported that six out of ten of local authorities are intending to dispose of properties to cover the escalating costs of social services for vulnerable individuals.
Councils have in the past faced criticism for disposing of public land and land to shore up their finances, but they contend they must proceed to generate essential revenue from asset sales or declare themselves bankrupt.
This coalition noted that a significant number of councils seeking to generate funds from a fire sale of holdings represented “a clear change from 2024, when the largest share (six in ten) of municipal officials said they would focus on restructuring services and using financial reserves to weather increasing fiscal pressures.”
Specific Examples of Proposed Disposals
One local authority in Kent announced its asset disposal plan included the disposal of a retail complex in Rainham and a community venue in Rochester to generate £20m over the next half-decade.
- A local golf course and business parks held in Worcestershire and Suffolk, which all generate rent for Medway council, will also be disposed of under the strategy.
Council Tax Increases and Broader Financial Strains
This research of local authorities in the coalition, which covers Sunderland, Southampton, Gloucester and Salford, also found that over seven in ten of authorities will have to increase local levies next spring to address the rising cost of core provisions, higher levels of homelessness, and a persistent housing shortage.
The authority said it will proceed with property disposals after steep rises in the cost of children services, support for vulnerable learners, adult social care, and short-term housing.
“We are taking creative strategies but some of these take time to deliver both better provisions and cost efficiency,” said a council leader.
He added: “We face demographic pressures which will continue to increase the strains we have. As a unitary authority, we had a 91% cut in our central funding from over the past decade, which is extremely difficult.”
National Patterns and Projections
A survey of county councils this week further found council budgets being stretched by the growing number of young people and adults needing special educational assistance.
The County Councils Network projected that council deficits will hit £4.4bn a year by 2029, as they struggle to manage rising needs.
Ministers have put off scheduled changes to the Send system until the coming year after a policy document setting out those reforms has been postponed.
Disadvantage and Financial Shortfalls
According to the most recent deprivation measures (the Index of Multiple Deprivation) for UK local authorities, several participating urban areas were among the most disadvantaged in England.
- “Member cities like several major towns rank in the top 30 nationally under the latest deprivation indices,” noted the study.
“Although only one key city is among the top 10 for disadvantaged communities nationally, cities are far more likely to be in the worst-off 20% of England. The data underscores the extent of challenges facing local leaders across key cities in the coming year,” the report added.
“Local government leaders have been clear about the necessity for a fair and sustainable financial structure that reflects and addresses the real levels of deprivation and demand,” stated Michael Mordey.
“Without this, councils will persist to face difficult decisions around which essential services to fund, and which to reduce, to the detriment of their residents.”
A fifth of local authorities have cut or compromised care services in the last year, the survey revealed.
