Based on a recent study of local authorities, UK councils are planning to sell community centers, sports centres, and shopping arcades as they rely on a fire sale of properties to stabilize finances.
Increasing Financial Challenges Drive Asset Sales
The Key Cities Group representing second-tier cities in the UK reported that six out of ten of councils are planning to sell assets to meet the escalating costs of social services for vulnerable individuals.
Councils have previously come under fire for disposing of public land and land to shore up their budgets, but they contend they must proceed to generate essential revenue from asset sales or face insolvency.
The group noted that a significant number of authorities attempting to raise money from a quick sale of assets represented “a distinct shift from 2024, when the largest share (60%) of local leaders stated they would focus on restructuring services and utilising financial reserves to manage growing financial challenges.”
Specific Examples of Proposed Disposals
One local authority in Kent said its asset disposal plan featured the disposal of a shopping centre in Rainham and a social club in another town to generate £20m over five years.
- A local golf course and commercial properties held in two English counties, which all provide rental income for the authority, will additionally be sold under the strategy.
Council Tax Increases and Broader Financial Pressures
This research of local authorities in the key cities group, which includes several urban centers, further found that over seven in ten of councils will need to increase council taxes next spring to address the rising cost of core provisions, increased rates of homelessness, and a longstanding housing shortage.
Medway council said it will press ahead with property disposals after steep rises in the cost of children services, support for vulnerable learners, adult social care, and temporary accommodation.
“We are taking creative strategies but some of these take time to achieve both better provisions and cost efficiency,” said a council leader.
He continued: “We face demographic pressures which will continue to add to the pressures we have. As a local government body, we had a 91% cut in our central funding from over the past decade, which is very challenging.”
Countrywide Trends and Forecasts
Research of county councils recently further found council budgets being strained by the growing number of young people and adults needing special educational assistance.
A network of councils projected that local shortfalls will reach £4.4bn a year by 2029, as they grapple to cope with increased demand.
Ministers have delayed scheduled changes to the special educational needs framework until next year after a white paper outlining those reforms was recently delayed.
Disadvantage and Funding Gaps
Based on the most recent deprivation measures (IMD) covering UK local authorities, many key cities members were among the most disadvantaged in England.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton rank in the most deprived 30 nationally under the latest IMD measures,” said the study.
“Although only a single urban area is in the top 10 for deprived neighbourhoods countrywide, urban areas are much more prone to be in the worst-off 20% of England. The data underscores the extent of difficulties facing municipal officials across key cities in the next twelve months,” the analysis added.
“Local government leaders have been explicit about the need for a fair and sustainable financial structure that accounts for and responds to the actual extent of disadvantage and need,” said Michael Mordey.
“Without this, councils will persist to face impossible choices around which essential services to fund, and which to reduce, to the detriment of their residents.”
A fifth of local authorities have reduced or weakened care services in the past 12 months, the survey revealed.
