Based on a recent poll of municipal councils, UK councils are preparing to offload social clubs, sports centres, and retail spaces as they rely on a fire sale of properties to balance the books.
Growing Fiscal Pressures Prompt Asset Sales
The Key Cities Group representing second-tier cities in the UK stated that six out of ten of councils are intending to sell assets to cover the escalating costs of social services for vulnerable individuals.
Councils have previously faced criticism for disposing of playing fields and open spaces to shore up their finances, but they argue they must continue to raise vital cash from asset sales or declare themselves bankrupt.
This coalition noted that a significant number of councils attempting to raise money from a fire sale of assets marked “a distinct shift from 2024, when the majority (60%) of local leaders said they would focus on restructuring services and utilising financial reserves to manage growing financial challenges.”
Detailed Examples of Proposed Sales
Medway Council in Kent said its property management strategy included the sale of a retail complex in Rainham and a community venue in Rochester to raise £20m over the next half-decade.
- A local golf course and commercial properties held in two English counties, which all provide rental income for Medway council, will also be disposed of under the plan.
Council Tax Rises and Wider Fiscal Strains
The survey of local authorities in the key cities group, which includes Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of authorities will need to raise local levies next spring to cover the growing cost of essential services, higher levels of housing insecurity, and a longstanding housing shortage.
The authority explained it will press ahead with property disposals after sharp increases in the cost of youth support, special educational needs and disability (Send) provision, elderly and disability services, and short-term housing.
“We are adopting creative strategies but certain measures require time to achieve both improved services and cost efficiency,” said a council leader.
He continued: “There are demographic pressures which will continue to increase the strains we have. As a unitary authority, we had a drastic reduction in our revenue support grant from 2010-24, which is extremely difficult.”
Countrywide Patterns and Forecasts
A survey of county councils this week further found local finances being strained by the growing number of young people and adults requiring Send support.
The County Councils Network projected that council deficits will reach 4.4 billion pounds a year by the end of the decade, as they grapple to manage increased demand.
Ministers have delayed planned reforms to the Send system until next year after a policy document outlining those reforms was recently delayed.
Disadvantage and Funding Shortfalls
According to the most recent deprivation measures (IMD) for English councils, many participating urban areas were among the most disadvantaged in England.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the top 30 across the country under the latest IMD measures,” said the study.
“While only a single urban area is among the top 10 for deprived neighbourhoods countrywide, cities are far more likely to be in the worst-off 20% of England. The figures highlights the extent of challenges confronting local leaders across key cities in the next twelve months,” the report concluded.
“Council officials have been clear about the need for a fair and sustainable funding system that accounts for and responds to the real levels of disadvantage and need,” stated a council leader.
“Without this, councils will continue to face difficult decisions around which essential services to fund, and which to reduce, to the detriment of their residents.”
One in five of councils have reduced or weakened care services in the past 12 months, the study revealed.
