Based on a recent study of municipal councils, English councils are planning to sell community centers, sports centres, and retail spaces as they rely on a fire sale of properties to balance the books.
Growing Financial Pressures Drive Asset Sales
The Key Cities Group representing major urban areas in the UK stated that 60% of local authorities are intending to sell assets to cover the escalating costs of social services for vulnerable individuals.
Councils have previously faced criticism for selling public land and open spaces to shore up their finances, but they argue they must continue to generate essential revenue from asset sales or declare themselves bankrupt.
The group said that a high proportion of authorities seeking to raise money from a fire sale of holdings marked “a clear change from 2024, when the largest share (six in ten) of local leaders said they would focus on restructuring services and utilising financial reserves to manage increasing financial challenges.”
Specific Examples of Proposed Sales
Medway Council in southeast England announced its asset disposal plan included the disposal of a shopping centre in a local town and a community venue in Rochester to generate £20m over five years.
- Gillingham golf club and business parks held in Worcestershire and Suffolk, which all provide rental income for Medway council, will additionally be sold under the plan.
Council Tax Increases and Broader Financial Pressures
The survey of local authorities in the coalition, which includes several urban centers, also found that over seven in ten of authorities will have to increase local levies next April to address the growing cost of essential services, higher levels of housing insecurity, and a longstanding accommodation deficit.
Medway council explained it will press ahead with asset sales after steep rises in the cost of youth support, special educational needs and disability (Send) provision, adult social care, and temporary accommodation.
“We are adopting innovative approaches but some of these require time to achieve both improved services and cost efficiency,” stated 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 over the past decade, which is extremely difficult.”
Countrywide Trends and Projections
A survey of regional authorities recently further found local finances being strained by the increasing figures of young people and adults requiring special educational assistance.
A network of councils projected that council deficits will hit £4.4bn a year by the end of the decade, as they struggle to cope with increased demand.
Ministers have delayed scheduled changes to the Send system until the coming year after a white paper setting out those changes was recently delayed.
Deprivation and Funding Shortfalls
According to the most recent indices of deprivation (IMD) for English councils, several key cities members were among the most disadvantaged in England.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton rank in the top 30 nationally under the latest IMD measures,” noted the study.
“While only one key city is among the ten most deprived for disadvantaged communities nationally, urban areas are far more likely to be in the most deprived fifth of the nation. The data underscores the scale of challenges facing local leaders across major urban centers in the next twelve months,” 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,” stated Michael Mordey.
“Without this, local authorities will continue to face difficult decisions around which vital provisions to fund, and which to reduce, to the disadvantage of their communities.”
A fifth of councils have reduced or weakened care services in the last year, the survey found.
