According to a recent study of municipal councils, English councils are preparing to offload social clubs, athletic facilities, and shopping arcades as they bet on a fire sale of properties to stabilize finances.
Increasing Financial Challenges Drive Asset Sales
A coalition of councils for major urban areas in the UK reported that six out of ten of councils are planning to sell assets to meet the escalating costs of adult and children’s social care.
Councils have previously faced criticism for selling playing fields and open spaces to support their finances, but they contend they must proceed to raise vital cash from asset sales or declare themselves bankrupt.
The group said that a high proportion of authorities seeking to generate funds from a fire sale of assets marked “a distinct shift from 2024, when the majority (60%) of local leaders stated they would prioritise service redesigns and using financial reserves to weather increasing fiscal pressures.”
Specific Examples of Proposed Sales
One local authority in Kent announced its asset disposal plan included the disposal of a retail complex in Rainham and a community venue in another town to generate 20 million pounds over five years.
- Gillingham golf club and commercial properties held in two English counties, which all provide rental income for Medway council, will also be sold under the plan.
Local Levy Rises and Broader Fiscal Pressures
The survey of councils in the key cities group, which includes Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of councils will need to raise local levies next spring to cover the rising cost of essential services, increased rates of homelessness, and a persistent housing shortage.
Medway council explained it will proceed with asset sales after sharp increases in the cost of youth support, support for vulnerable learners, elderly and disability services, and short-term housing.
“We are adopting innovative approaches but some of these require time to deliver both better provisions and financial savings,” said Vince Maple.
He added: “There are demographic pressures which will persist to add to the strains we have. As a local government body, we had a drastic reduction in our central funding from 2010-24, which is extremely difficult.”
National Trends and Forecasts
Research of regional authorities this week further found local finances being strained by the growing number of children and adults requiring special educational assistance.
The County Councils Network projected that council deficits will hit 4.4 billion pounds a year by the end of the decade, as they grapple to manage rising needs.
Government officials have delayed planned reforms to the Send system until the coming year after a white paper setting out those reforms has been postponed.
Deprivation and Financial Shortfalls
According to the most recent indices of deprivation (the Index of Multiple Deprivation) covering English councils, several key cities members were included in the most deprived in England.
- “Member cities like several major towns place in the top 30 nationally under the latest deprivation indices,” noted the report.
“Although only one key city is in the top 10 for deprived neighbourhoods nationally, cities are far more likely to be in the most deprived fifth of the nation. The figures highlights the extent of challenges facing 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 funding system that reflects and addresses the real levels of deprivation and demand,” said Michael Mordey.
“Without this, local authorities will persist to face impossible choices around which essential services to allocate spend to, and which to reduce, to the detriment of their residents.”
One in five of local authorities have reduced or weakened care services in the past 12 months, the study found.
