According to a recent survey of local authorities, English councils are preparing to offload social clubs, sports centres, and retail spaces as they rely on a fire sale of properties to stabilize finances.
Increasing Financial Challenges Prompt Asset Sales
A coalition of councils for major urban areas in the UK reported that six out of ten of councils are planning to sell assets to meet the rising costs of social services for vulnerable individuals.
Councils have previously faced criticism for disposing of public land and land to support their budgets, but they argue they must proceed to raise vital cash from property disposals or declare themselves bankrupt.
The group said that a high proportion of authorities seeking to raise money from a fire sale of holdings represented “a distinct shift from 2024, when the majority (60%) of local leaders said they would focus on service redesigns and utilising savings to manage growing fiscal pressures.”
Detailed Examples of Planned Disposals
One local authority in southeast England said its property management strategy featured the sale of a shopping centre in a local town and a social club in Rochester to generate £20m over five years.
- Gillingham golf club and commercial properties owned in two English counties, which all provide rental income for the authority, will also be sold under the strategy.
Council Tax Rises and Wider Fiscal Strains
The survey of councils in the key cities group, which includes Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of authorities will need to increase local levies next spring to cover the rising cost of essential services, increased rates of homelessness, and a longstanding housing shortage.
Medway council explained it will press ahead with asset sales after steep rises in the cost of youth support, support for vulnerable learners, elderly and disability services, and short-term housing.
“We are adopting creative strategies but some of these take time to deliver both better provisions and cost efficiency,” said Vince Maple.
He added: “There are demographic pressures which will continue to increase the pressures we have. As a unitary authority, we had a drastic reduction in our central funding from over the past decade, which is very challenging.”
National Trends and Forecasts
Research of county councils this week also found local finances being strained by the growing number of children and adults needing special educational assistance.
A network of councils projected that council deficits will hit £4.4bn a year by 2029, as they struggle to cope with rising needs.
Government officials have put off scheduled changes to the Send system until the coming year after a policy document setting out those changes was recently delayed.
Disadvantage and Funding Shortfalls
According to the latest deprivation measures (IMD) for English councils, many participating urban areas were included in the most disadvantaged in England.
- “Participating urban centers like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the most deprived 30 across the country under the latest IMD measures,” said the report.
“Although only one key city is among the top 10 for disadvantaged communities countrywide, cities are far more likely to be in the worst-off 20% of England. The data underscores the extent of difficulties facing municipal officials across major urban centers in the next twelve months,” the analysis added.
“Council officials have been explicit about the need for a fair and sustainable funding system that accounts for and responds to the actual extent of disadvantage and need,” said a council leader.
“Lacking this, councils will persist to face impossible choices around which essential services to fund, and which to reduce, to the detriment of their residents.”
A fifth of local authorities have cut or compromised care services in the past 12 months, the survey revealed.