Based on a new study of local authorities, English councils are preparing to sell community centers, athletic facilities, and shopping arcades as they rely on a fire sale of assets to stabilize finances.
Growing Fiscal Challenges Drive Asset Sales
A coalition of councils representing second-tier cities in the UK reported that six out of ten of councils are intending to sell assets to cover the rising costs of social services for vulnerable individuals.
Local governments have in the past come under fire for selling playing fields and open spaces to shore up their budgets, but they argue they must proceed to raise vital cash from asset sales or face insolvency.
This coalition noted that a high proportion of councils seeking to generate funds from a quick sale of assets marked “a distinct shift from 2024, when the majority (six in ten) of municipal officials stated they would focus on restructuring services and using financial reserves to weather growing financial challenges.”
Specific Cases of Planned Disposals
Medway Council in Kent announced its property management strategy featured the sale of a retail complex in Rainham and a community venue in Rochester to generate £20m over the next half-decade.
- Gillingham golf club and business parks owned in two English counties, which all generate rent for Medway council, will also be sold under the plan.
Council Tax Increases and Wider Financial Strains
This research of councils in the key cities group, which covers Sunderland, Southampton, Gloucester and Salford, also found that more than 70% of councils will have to increase council taxes next spring to cover the rising cost of core provisions, higher levels of homelessness, and a persistent accommodation deficit.
Medway council said it will press ahead with property disposals after steep rises in the cost of children services, support for vulnerable learners, elderly and disability services, and temporary accommodation.
“We are adopting innovative approaches but some of these require time to achieve both improved services and cost efficiency,” stated Vince Maple.
He continued: “There are population challenges which will persist to add to 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 extremely difficult.”
Countrywide Trends and Forecasts
Research of county councils this week also found local finances being stretched by the growing number of young people and adults requiring special educational assistance.
The County Councils Network projected that council deficits will hit £4.4bn a year by 2029, as they struggle to cope with rising needs.
Government officials have put off planned reforms to the special educational needs framework until the coming year after a white paper outlining those reforms was recently delayed.
Disadvantage and Financial Shortfalls
Based on the latest deprivation measures (the Index of Multiple Deprivation) covering English councils, many key cities members were included in the most disadvantaged in England.
- “Participating urban centers like several major towns rank in the top 30 nationally under the latest IMD measures,” said the report.
“Although only one key city is in the ten most deprived for deprived neighbourhoods countrywide, cities are far more likely to be in the most deprived fifth of the nation. The figures underscores the scale of challenges confronting municipal officials across key cities in the coming year,” the report added.
“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 deprivation and need,” stated a council leader.
“Without this, local authorities will continue to face impossible choices around which vital provisions to allocate spend to, and which to reduce, to the disadvantage of their communities.”
A fifth of councils have cut or compromised social care provision in the past 12 months, the study found.
