Based on a new poll of municipal councils, UK councils are planning to offload community centers, sports centres, and retail spaces as they rely on a fire sale of assets to balance the books.
Growing Financial Pressures Drive Asset Sales
A coalition of councils for second-tier cities in the UK stated that six out of ten of councils are intending to sell assets to meet the escalating costs of social services for vulnerable individuals.
Councils have previously faced criticism for selling playing fields and open spaces to shore up their finances, but they argue they must proceed to generate essential revenue from property disposals or face insolvency.
This coalition said that a significant number of councils seeking to raise money from a quick sale of assets represented “a distinct shift from 2024, when the largest share (six in ten) of local leaders said they would prioritise service redesigns and using financial reserves to weather increasing financial challenges.”
Specific Cases of Planned Sales
Medway Council in southeast England announced its property management strategy included the disposal of a shopping centre in a local town and a community venue in another town to raise £20m over the next half-decade.
- A local golf course and commercial properties owned in Worcestershire and Suffolk, which all generate rent for the authority, will also be sold under the strategy.
Council Tax Rises and Wider Financial Strains
This research of local authorities in the coalition, which includes Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of councils will have to raise council taxes next spring to address the rising cost of essential services, higher levels of homelessness, and a longstanding accommodation deficit.
The authority said 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 short-term housing.
“We are adopting innovative approaches but some of these take time to deliver both improved services and cost efficiency,” said a council leader.
He added: “We face population challenges which will continue to add to the pressures we have. As a unitary authority, we had a drastic reduction in our central funding from over the past decade, which is extremely difficult.”
Countrywide Trends and Forecasts
Research of regional authorities this week further found council budgets being stretched by the increasing figures of young people and older individuals requiring Send support.
A network of councils said that council deficits will reach £4.4bn a year by 2029, as they grapple to cope with rising needs.
Ministers have put off planned reforms to the Send system until next year after a white paper outlining those reforms has been postponed.
Deprivation and Financial Gaps
Based on the most recent indices of deprivation (IMD) covering UK local authorities, many participating urban areas were included in the most disadvantaged in England.
- “Member cities like several major towns rank in the most deprived 30 nationally under the latest IMD measures,” said the report.
“Although only one key city is in the top 10 for disadvantaged communities countrywide, urban areas 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 analysis added.
“Local government leaders have been clear about the need for a fair and sustainable funding system that reflects and addresses the actual extent of deprivation and need,” said Michael Mordey.
“Without this, councils will continue to face impossible choices around which essential services to allocate spend to, and which to reduce, to the disadvantage of their residents.”
One in five of councils have reduced or weakened care services in the past 12 months, the survey revealed.
