Based on a new study of municipal councils, English councils are preparing to offload social clubs, sports centres, and shopping arcades as they bet on a fire sale of properties to balance the books.
Growing Financial Challenges Drive Asset Sales
The Key Cities Group representing second-tier cities in the UK stated that 60% of local authorities are planning to sell assets to meet the rising costs of social services for vulnerable individuals.
Councils have in the past faced criticism for selling public land and open spaces to shore up their finances, but they argue they must proceed to raise vital cash from asset sales or declare themselves bankrupt.
This coalition said that a significant number of authorities seeking 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 prioritise restructuring services and using savings to weather increasing financial challenges.”
Detailed Cases of Planned Sales
Medway Council in southeast England said its asset disposal plan featured the sale of a retail complex in Rainham and a community venue in another town to raise £20m over the next half-decade.
- A local golf course and commercial properties held in Worcestershire and Suffolk, which all generate rent for Medway council, will also be disposed of under the plan.
Local Levy Increases and Wider Financial Pressures
This research of local authorities in the key cities group, which covers Sunderland, Southampton, Gloucester and Salford, also found that over seven in ten of councils will have to raise local levies next April to address the growing cost of core provisions, increased rates of housing insecurity, and a longstanding housing shortage.
Medway council said it will press ahead with asset sales after sharp increases in the cost of youth support, special educational needs and disability (Send) provision, elderly and disability services, and temporary accommodation.
“We are taking innovative approaches but certain measures take time to achieve both improved services and financial savings,” said a council leader.
He added: “We face demographic pressures which will persist to increase the pressures we have. As a unitary authority, we had a 91% cut in our central funding from over the past decade, which is very challenging.”
National Patterns and Projections
Research of regional authorities this week further found council budgets being stretched by the growing number of children and adults needing Send support.
The County Councils Network projected that council deficits will hit £4.4bn a year by the end of the decade, as they grapple to cope with rising needs.
Government officials have put off scheduled changes to the special educational needs framework until next year after a policy document outlining those changes has been postponed.
Deprivation and Funding Shortfalls
Based on the latest indices of deprivation (IMD) covering English councils, many key cities members were included in 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 report.
“While only a single urban area is in the top 10 for disadvantaged communities countrywide, cities are far more likely to be in the most deprived fifth of the nation. The data underscores the extent of challenges facing municipal officials across key cities in the next twelve months,” the report concluded.
“Council officials have been clear about the necessity for a fair and sustainable financial structure that reflects and responds to the real levels of disadvantage and need,” said a council leader.
“Lacking this, local authorities will persist to face difficult decisions around which vital provisions to allocate spend to, and which to reduce, to the disadvantage of their communities.”
A fifth of local authorities have reduced or weakened social care provision in the past 12 months, the study found.
