Based on a new study of municipal councils, English councils are planning to sell social clubs, sports centres, and shopping arcades as they bet on a rapid disposal of properties to balance the books.
Increasing Fiscal Challenges Drive Asset Sales
The Key Cities Group representing major urban areas in the UK reported that 60% of councils are planning to dispose of properties to cover the escalating costs of adult and children’s social care.
Councils have in the past come under fire for disposing of public land and land to shore up their budgets, but they contend they must proceed to generate essential revenue from asset sales or declare themselves bankrupt.
The group noted that a significant number of councils 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 restructuring services and using savings to manage increasing financial challenges.”
Specific Examples of Proposed Disposals
One local authority in Kent announced its asset disposal plan included the disposal of a shopping centre in a local town and a community venue in Rochester to raise £20m over five years.
- Gillingham golf club and business parks owned in Worcestershire and Suffolk, which all provide rental income for the authority, will additionally be disposed of under the plan.
Council Tax Rises and Broader Financial Strains
The survey of councils in the key cities group, which includes several urban centers, also found that over seven in ten of councils will need to increase council taxes next April to address the rising cost of essential services, higher levels of homelessness, and a persistent housing shortage.
The authority said it will press ahead with property disposals after sharp increases in the cost of youth support, support for vulnerable learners, elderly and disability services, and short-term housing.
“We are taking creative strategies but certain measures require time to achieve both improved services and financial savings,” said a council leader.
He continued: “There are population challenges which will persist to add to the strains we have. As a local government body, we had a 91% cut in our central funding from over the past decade, which is extremely difficult.”
National 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 council deficits will reach £4.4bn a year by the end of the decade, as they struggle to cope with increased demand.
Ministers have delayed planned reforms to the Send system until the coming year after a policy document outlining those reforms has been postponed.
Disadvantage and Financial Shortfalls
Based on the most recent indices of deprivation (the Index of Multiple Deprivation) covering UK local authorities, several key cities members were among the most deprived in the country.
- “Participating urban centers like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the most deprived 30 nationally under the latest deprivation indices,” noted the study.
“Although only a single urban area is in the ten most deprived for deprived neighbourhoods countrywide, urban areas are far more likely to be in the worst-off 20% of England. The figures highlights the scale of difficulties confronting local leaders across key cities in the next twelve months,” the analysis concluded.
“Council officials have been explicit about the necessity for a fair and sustainable financial structure that reflects and responds to the real levels of disadvantage and need,” stated a council leader.
“Lacking this, councils will continue to face impossible choices around which vital provisions to fund, and which to cut, to the disadvantage of their residents.”
A fifth of local authorities have cut or compromised social care provision in the past 12 months, the study revealed.
