According to a new survey of municipal councils, UK councils are preparing to sell social clubs, sports centres, and shopping arcades as they rely on a rapid disposal of assets to balance the books.
Increasing Fiscal Challenges Drive Asset Sales
A coalition of councils for major urban areas in England reported that 60% of councils are intending to dispose of properties to cover the rising costs of social services for vulnerable individuals.
Local governments have in the past faced criticism for selling playing fields and land to shore up their budgets, but they argue they must proceed to generate essential revenue from asset sales or face insolvency.
This coalition said that a significant number of councils attempting to raise money from a fire sale of assets represented “a distinct shift from 2024, when the majority (60%) of municipal officials stated they would prioritise service redesigns and using savings to weather growing fiscal pressures.”
Specific Examples of Proposed Disposals
One local authority in Kent announced its property management strategy featured the disposal of a retail complex in a local town and a community venue in another town to generate £20m over five years.
- A local golf course and commercial properties held in Worcestershire and Suffolk, which all provide rental income for Medway council, will also be sold under the strategy.
Council Tax Rises and Wider Financial Strains
The survey of councils in the coalition, which covers several urban centers, also found that more than 70% of authorities will have to increase council taxes next spring to cover the rising cost of essential services, increased rates of housing insecurity, and a longstanding accommodation deficit.
Medway council explained it will press ahead with property disposals after sharp increases 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 take time to deliver both improved services and cost efficiency,” said Vince Maple.
He added: “There are demographic pressures which will persist 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 very challenging.”
Countrywide Patterns and Forecasts
Research of regional authorities recently also found council budgets being strained by the growing number of children and adults requiring Send support.
A network of councils projected that local shortfalls will reach £4.4bn a year by the end of the decade, as they grapple to manage increased demand.
Ministers have put off planned reforms to the special educational needs framework until the coming year after a white paper setting out those changes has been postponed.
Disadvantage and Financial Shortfalls
Based on the most recent deprivation measures (the Index of Multiple Deprivation) for English councils, many participating urban areas were among the most disadvantaged in the country.
- “Participating urban centers like several major towns place in the top 30 across the country under the latest deprivation indices,” said the study.
“While only a single urban area is among the top 10 for deprived neighbourhoods nationally, urban areas are far more likely to be in the most deprived fifth of England. The data underscores the extent of challenges confronting municipal officials across major urban centers in the next twelve months,” the analysis concluded.
“Council officials have been clear about the necessity for a equitable and lasting funding system that reflects and addresses the actual extent of deprivation and need,” said Michael Mordey.
“Lacking this, councils will persist to face difficult decisions around which vital provisions to fund, and which to cut, to the disadvantage of their residents.”
A fifth of councils have reduced or weakened care services in the last year, the study revealed.
