Based on a recent study of municipal councils, English councils are preparing to offload social clubs, sports centres, and shopping arcades as they rely on a fire sale of properties to balance the books.
Increasing Financial Challenges Drive Asset Sales
The Key Cities Group for major urban areas in the UK stated that 60% of councils are planning to sell assets to cover the rising costs of adult and children’s social care.
Local governments have in the past faced criticism for selling public land and open spaces to shore up their finances, but they contend they must proceed to generate essential revenue from asset sales or declare themselves bankrupt.
This coalition noted that a high proportion of authorities attempting to raise money from a fire sale of assets represented “a clear change from 2024, when the largest share (six in ten) of local leaders said they would focus on restructuring services and using financial reserves to manage growing financial challenges.”
Specific Examples of Planned Disposals
One local authority in Kent said its asset disposal plan featured the disposal of a retail complex in a local town and a community venue in another town to generate £20m over the next half-decade.
- A local golf course and business parks held in Worcestershire and Suffolk, which all generate rent for the authority, will also be sold under the strategy.
Local Levy Increases and Wider Financial Pressures
This research of councils in the key cities group, which covers several urban centers, also found that over seven in ten of authorities will need to increase local levies next spring to address the rising cost of essential services, increased rates of homelessness, and a persistent accommodation deficit.
The authority said it will press ahead with property disposals after steep rises in the cost of children services, special educational needs and disability (Send) provision, adult social care, and temporary accommodation.
“We are adopting innovative approaches but certain measures take time to deliver both improved services and financial savings,” said Vince Maple.
He added: “We face demographic pressures which will persist to increase the pressures we have. As a unitary authority, we had a 91% cut in our central funding from over the past decade, which is very challenging.”
National Trends and Forecasts
A survey of regional authorities recently further found local finances being stretched by the growing number of young people and adults requiring Send support.
The County Councils Network said that council deficits will hit £4.4bn a year by the end of the decade, as they struggle to cope with rising needs.
Ministers have put off planned reforms to the Send system until the coming year after a policy document setting out those changes has been postponed.
Disadvantage and Funding Shortfalls
Based on the most recent deprivation measures (the Index of Multiple Deprivation) for English councils, many key cities members were included in the most disadvantaged in England.
- “Member cities like several major towns place in the top 30 across the country under the latest deprivation indices,” noted the report.
“While only one key city is in the ten most deprived for deprived neighbourhoods nationally, cities are far more likely to be in the worst-off 20% of the nation. The figures highlights the scale of difficulties facing local leaders across key cities in the coming year,” the report concluded.
“Council officials have been explicit about the need for a equitable and lasting funding system that reflects and responds to the real levels of deprivation and demand,” said Michael Mordey.
“Lacking this, councils will persist to face impossible choices around which essential services to fund, and which to reduce, to the disadvantage of their communities.”
A fifth of local authorities have cut or compromised care services in the past 12 months, the study found.
