Based on a latest study of local authorities, UK councils are preparing to offload social clubs, sports centres, and shopping arcades as they rely on a fire sale of assets to balance the books.
Increasing Financial Challenges Prompt Asset Sales
A coalition of councils representing major urban areas in England reported that six out of ten of councils are intending to sell assets to meet the rising costs of social services for vulnerable individuals.
Councils have previously faced criticism for selling public land and land to support their finances, but they argue they must continue to generate essential revenue from property disposals or declare themselves bankrupt.
This coalition said that a significant number of councils seeking to raise money from a fire sale of assets marked “a clear change from 2024, when the majority (60%) of local leaders stated they would focus on restructuring services and using financial reserves to manage increasing financial challenges.”
Specific Examples of Proposed Disposals
One local authority in Kent said its property management strategy included the disposal of a shopping centre in a local town and a social club in Rochester to generate 20 million pounds over the next half-decade.
- Gillingham golf club and business parks held in Worcestershire and Suffolk, which all provide rental income for the authority, will also be sold under the plan.
Local Levy Increases and Broader Fiscal Pressures
This research of councils in the coalition, which includes Sunderland, Southampton, Gloucester and Salford, further found that over seven in ten of councils will have to increase council taxes next April to cover the growing cost of core provisions, 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, special educational needs and disability (Send) provision, elderly and disability services, and short-term housing.
“We are taking creative strategies but some of these require time to deliver both better provisions and financial savings,” stated a council leader.
He continued: “There are population challenges which will persist to increase the strains 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.”
National Patterns and Projections
A survey of regional authorities this week also found council budgets being stretched by the increasing figures of children and adults needing special educational assistance.
The County Councils Network projected that local shortfalls will hit £4.4bn a year by the end of the decade, as they struggle to manage rising needs.
Government officials have put off scheduled changes to the special educational needs framework until next year after a white paper setting out those changes was recently delayed.
Deprivation and Funding Shortfalls
According to the latest indices of deprivation (IMD) for English councils, several key cities members were among the most disadvantaged in the country.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the top 30 nationally under the latest deprivation indices,” said the study.
“While only one key city is in the top 10 for disadvantaged communities countrywide, urban areas are much more prone to be in the most deprived fifth of the nation. The data highlights the scale of challenges facing local leaders across key cities in the next twelve months,” the report added.
“Local government leaders have been explicit about the necessity for a fair and sustainable funding system that reflects and addresses the actual extent of deprivation and demand,” said Michael Mordey.
“Without this, councils will continue to face difficult decisions around which vital provisions to fund, and which to reduce, to the detriment of their communities.”
One in five of councils have cut or compromised social care provision in the last year, the study found.
