Based on a new study of municipal councils, English councils are preparing to offload community centers, sports centres, and retail spaces as they rely on a rapid disposal of properties to balance the books.
Increasing Financial Challenges Drive Asset Sales
A coalition of councils for second-tier cities in the UK reported that 60% of councils are planning to dispose of properties to cover the rising costs of adult and children’s social care.
Local governments have in the past come under fire for selling playing fields and land to shore up their finances, but they argue they must proceed to raise vital cash from property disposals or face insolvency.
The group said that a significant number of councils attempting to generate funds from a fire sale of assets represented “a distinct shift from 2024, when the largest share (six in ten) of municipal officials said they would focus on restructuring services and utilising savings to manage growing financial challenges.”
Specific Cases of Proposed Disposals
Medway Council in southeast England announced its asset disposal plan included the disposal of a retail complex 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 held in two English counties, which all generate rent for Medway council, will additionally be sold under the plan.
Local Levy Rises and Broader Financial Pressures
The survey of local authorities in the key cities group, which includes several urban centers, also found that over seven in ten of authorities will need to increase council taxes next spring to address the rising cost of essential services, increased rates of housing insecurity, and a persistent housing shortage.
The authority said it will press ahead with asset sales after steep rises in the cost of children services, support for vulnerable learners, elderly and disability services, and temporary accommodation.
“We are adopting creative strategies but some of these take time to deliver both improved services and cost efficiency,” said a council leader.
He continued: “There are demographic pressures which will persist to increase the pressures we have. As a local government body, we had a 91% cut in our revenue support grant from over the past decade, which is very challenging.”
Countrywide Trends and Forecasts
A survey of county councils this week also found local finances being strained by the increasing figures of children and adults requiring special educational assistance.
A network of councils projected that council deficits will reach £4.4bn a year by the end of the decade, as they struggle to cope with rising needs.
Government officials have delayed scheduled changes to the special educational needs framework until the coming year after a white paper setting out those reforms was recently delayed.
Disadvantage and Financial Gaps
Based on the latest deprivation measures (the Index of Multiple Deprivation) for UK local authorities, several key cities members were among the most disadvantaged in the country.
- “Member cities like several major towns rank in the most deprived 30 across the country under the latest IMD measures,” noted the study.
“Although only one key city is among the ten most deprived for disadvantaged communities countrywide, cities are far more likely to be in the worst-off 20% of the nation. The figures highlights the scale of challenges confronting municipal officials across key cities in the next twelve months,” the report added.
“Local government leaders have been explicit about the need for a fair and sustainable funding system that reflects and addresses the real levels of deprivation and demand,” stated Michael Mordey.
“Without this, local authorities will persist to face difficult decisions around which vital provisions to allocate spend to, and which to reduce, to the detriment of their communities.”
A fifth of councils have reduced or weakened care services in the last year, the study revealed.
