According to a recent study of local authorities, UK councils are planning to sell community centers, sports centres, and shopping arcades as they rely on a fire sale of assets to balance the books.
Increasing Financial Pressures Drive Asset Sales
The Key Cities Group representing major urban areas in the UK stated that 60% of local authorities are intending 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 land to support their finances, but they argue they must proceed to raise vital cash from asset sales or declare themselves bankrupt.
This coalition noted that a significant number of authorities seeking to generate funds from a fire sale of holdings represented “a distinct shift from 2024, when the largest share (six in ten) of local leaders said they would prioritise restructuring services and utilising financial reserves to manage increasing financial challenges.”
Detailed Examples of Planned Sales
One local authority in southeast England said its asset disposal plan featured the disposal of a retail complex in a local town and a community venue in another town to raise £20m over five years.
- Gillingham golf club and commercial properties owned 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 Strains
This research of councils in the coalition, which covers Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of authorities will need to increase council taxes next April to cover the rising cost of essential services, higher levels of homelessness, and a longstanding accommodation deficit.
The authority explained it will proceed with asset sales 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 some of these require time to deliver both improved services and financial savings,” stated Vince Maple.
He continued: “We face demographic pressures which will continue to increase the strains 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 Patterns and Forecasts
A survey of county councils this week also found council budgets being strained by the growing number of young people and adults requiring special educational assistance.
A network of councils projected that local shortfalls will reach 4.4 billion pounds a year by the end of the decade, as they grapple to cope with increased demand.
Ministers have delayed scheduled changes to the special educational needs framework until the coming year after a policy document setting out those changes was recently delayed.
Deprivation and Financial Shortfalls
According to the latest indices of deprivation (the Index of Multiple Deprivation) covering UK local authorities, several key cities members were among the most deprived in England.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton rank in the top 30 across the country under the latest deprivation indices,” noted the report.
“While only one key city is in the top 10 for disadvantaged communities nationally, urban areas are far more likely to be in the most deprived fifth of England. The data highlights the scale of challenges facing municipal officials across key cities in the coming year,” the report concluded.
“Local government leaders have been clear about the need for a equitable and lasting financial structure that reflects and addresses the actual extent of deprivation and demand,” said a council leader.
“Without this, local authorities will persist to face impossible choices around which vital provisions to allocate spend to, and which to cut, to the detriment of their communities.”
A fifth of local authorities have reduced or weakened care services in the past 12 months, the survey revealed.
