According to a new study of municipal councils, UK councils are preparing to sell social clubs, sports centres, and retail spaces as they bet on a rapid disposal of assets to stabilize finances.
Growing Financial Challenges Drive Asset Sales
A coalition of councils for second-tier cities in the UK stated that 60% of councils are planning to sell assets to cover the escalating costs of adult and children’s social care.
Local governments have in the past faced criticism for disposing of public land and land to support their budgets, but they argue they must proceed to generate essential revenue from asset sales or declare themselves bankrupt.
This coalition said that a significant number of authorities attempting to generate funds from a fire sale of holdings marked “a clear change from 2024, when the majority (six in ten) of local leaders stated they would prioritise service redesigns and utilising savings to weather growing financial challenges.”
Specific Examples of Proposed Sales
One local authority in Kent said its asset disposal plan featured the disposal of a shopping centre in a local town and a social club in another town to generate 20 million pounds over the next half-decade.
- A local golf course and commercial properties held in Worcestershire and Suffolk, which all generate rent for Medway council, will also be sold under the plan.
Council Tax Increases and Wider Financial Strains
This research of local authorities in the key cities group, which includes several urban centers, also found that over seven in ten of authorities will have to raise local levies next spring to cover the rising cost of essential services, increased rates of housing insecurity, and a persistent housing shortage.
Medway council explained it will press ahead with asset sales after sharp increases in the cost of youth support, 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 financial savings,” stated Vince Maple.
He continued: “There are demographic pressures which will persist to add to the pressures we have. As a unitary authority, we had a 91% cut in our central funding from 2010-24, which is extremely difficult.”
Countrywide Trends and Projections
A survey of county councils recently also found council budgets being strained by the increasing figures of children and older individuals needing special educational assistance.
A network of councils projected that local shortfalls will hit £4.4bn a year by 2029, as they struggle to cope with increased demand.
Ministers have delayed planned reforms to the Send system until next year after a policy document setting out those changes was recently delayed.
Deprivation and Financial Shortfalls
Based on the latest deprivation measures (the Index of Multiple Deprivation) for UK local authorities, many participating urban areas were included in the most disadvantaged in England.
- “Participating urban centers like several major towns place in the top 30 nationally under the latest IMD measures,” noted the report.
“Although only a single urban area is in the top 10 for disadvantaged communities nationally, cities are far more likely to be in the worst-off 20% of the nation. The data underscores the extent of difficulties facing municipal officials across key cities in the coming year,” the analysis concluded.
“Council officials have been explicit about the necessity for a equitable and lasting funding system that reflects and addresses the actual extent of deprivation and demand,” stated Michael Mordey.
“Without this, local authorities will persist to face difficult decisions around which essential services to allocate spend to, and which to cut, to the detriment of their communities.”
One in five of councils have cut or compromised social care provision in the past 12 months, the survey found.
