Based on a recent poll of municipal councils, English councils are preparing to sell social clubs, sports centres, and shopping arcades as they rely on a fire sale of assets to balance the books.
Increasing Fiscal Pressures Prompt Asset Sales
The Key Cities Group for second-tier cities in the UK stated that 60% of councils are intending to sell assets to cover the escalating costs of adult and children’s social care.
Local governments have previously faced criticism for selling playing fields and open spaces to support their finances, but they contend they must proceed to generate essential revenue from property disposals or face insolvency.
The group noted that a high proportion of councils attempting to raise money from a fire sale of assets represented “a distinct shift from 2024, when the majority (60%) of local leaders stated they would focus on restructuring services and using savings to manage increasing fiscal pressures.”
Detailed Examples of Planned Disposals
Medway Council in southeast England announced its asset disposal plan featured the disposal of a shopping centre in Rainham and a social club in Rochester to raise 20 million pounds over five years.
- Gillingham golf club and commercial properties owned in two English counties, which all provide rental income for Medway council, will also be sold under the plan.
Council Tax Rises and Wider Financial Strains
This research of local authorities in the key cities group, which includes Sunderland, Southampton, Gloucester and Salford, also found that more than 70% of authorities will need to raise local levies next April to address the rising cost of core provisions, higher levels of homelessness, and a persistent housing shortage.
Medway council explained it will press ahead with property disposals after steep rises in the cost of youth support, support for vulnerable learners, adult social care, and short-term housing.
“We are adopting creative strategies but certain measures take time to achieve both improved services and cost efficiency,” said Vince Maple.
He added: “There are demographic pressures which will continue to increase the pressures 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 Forecasts
A survey of county councils this week further found local finances being strained by the growing number of young people and older individuals requiring Send support.
A network of councils projected that council deficits will reach £4.4bn a year by the end of the decade, as they grapple to manage rising needs.
Ministers have put off scheduled changes to the special educational needs framework until the coming year after a white paper setting out those reforms has been postponed.
Deprivation and Funding Shortfalls
Based on the latest deprivation measures (IMD) covering UK local authorities, many key cities members were included in the most deprived in the country.
- “Participating urban centers like several major towns place in the most deprived 30 across the country under the latest IMD measures,” said the study.
“Although only one key city is among the top 10 for deprived neighbourhoods countrywide, cities are much more prone to be in the most deprived fifth of England. The data underscores the scale of challenges facing municipal officials across key cities in the coming year,” the analysis concluded.
“Local government leaders have been clear about the necessity for a fair and sustainable financial structure that reflects and responds to the real levels of disadvantage and demand,” said a council leader.
“Lacking this, local authorities will persist to face impossible choices around which vital provisions to fund, and which to reduce, to the disadvantage of their residents.”
A fifth of local authorities have reduced or weakened care services in the last year, the survey found.
