According to a new poll of municipal councils, English councils are preparing to sell community centers, athletic facilities, and shopping arcades as they rely on a fire sale of assets to balance the books.
Increasing Financial Challenges Drive Asset Sales
A coalition of councils for second-tier cities in the UK reported that 60% of councils are planning to sell assets to meet the rising costs of social services for vulnerable individuals.
Local governments 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 raise vital cash from asset sales or declare themselves bankrupt.
The group said that a high proportion of councils attempting to raise money from a quick sale of assets marked “a distinct shift from 2024, when the largest share (six in ten) of municipal officials said they would prioritise restructuring services and using financial reserves to manage increasing fiscal pressures.”
Specific Cases of Proposed Sales
One local authority in southeast England said its asset disposal plan included the disposal of a retail complex in a local town and a community venue in Rochester to generate 20 million pounds over five years.
- Gillingham golf club and commercial properties owned in two English counties, which all generate rent for the authority, will additionally be disposed of under the plan.
Council Tax Increases and Wider Fiscal Strains
This research of local authorities in the coalition, which includes several urban centers, further found that more than 70% of councils will need to raise council taxes next spring to cover the growing cost of core provisions, increased rates of homelessness, and a longstanding accommodation deficit.
The authority explained it will press ahead with property disposals after sharp increases in the cost of children services, special educational needs and disability (Send) provision, adult social care, and temporary accommodation.
“We are taking innovative approaches but certain measures require time to deliver both improved services and cost efficiency,” said a council leader.
He continued: “We face population challenges which will continue to increase the strains we have. As a unitary authority, we had a drastic reduction in our central funding from over the past decade, which is extremely difficult.”
Countrywide Trends and Projections
A survey of county councils recently further found local finances being stretched by the growing number of young people and older individuals needing 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 scheduled changes to the Send system until next year after a policy document outlining those reforms was recently delayed.
Deprivation and Funding Gaps
Based on the most recent deprivation measures (the Index of Multiple Deprivation) for UK local authorities, many participating urban areas were included in the most deprived in England.
- “Participating urban centers like several major towns place in the top 30 across the country under the latest deprivation indices,” noted the study.
“While only one key city is in the top 10 for disadvantaged communities nationally, cities are far more likely to be in the most deprived fifth of England. The data highlights the extent of challenges confronting municipal officials across key cities in the coming year,” the report concluded.
“Council officials have been explicit about the need for a fair and sustainable funding system that accounts for and addresses the real levels of deprivation and need,” said Michael Mordey.
“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 residents.”
A fifth of local authorities have cut or compromised social care provision in the past 12 months, the study revealed.
