According to a latest survey of local authorities, English councils are preparing to sell community centers, athletic facilities, and retail spaces as they bet on a fire sale of assets to stabilize finances.
Growing Fiscal Challenges Drive Asset Sales
The Key Cities Group representing second-tier cities in England reported that 60% of councils are intending to sell assets to meet the escalating costs of social services for vulnerable individuals.
Local governments have previously faced criticism for selling public land and land to support their budgets, but they contend they must continue to generate essential revenue from property disposals or declare themselves bankrupt.
The group said that a significant number of authorities seeking to generate funds from a quick sale of assets represented “a distinct shift from 2024, when the largest share (six in ten) of local leaders stated they would focus on service redesigns and using financial reserves to weather growing financial challenges.”
Specific Cases of Planned Sales
One local authority in southeast England announced 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 provide rental income for Medway council, will additionally be disposed of under the plan.
Local Levy Increases and Wider Fiscal Pressures
This research of local authorities in the coalition, which includes Sunderland, Southampton, Gloucester and Salford, further found that over seven in ten of councils will need to increase local levies next April to cover the rising cost of essential services, increased rates of housing insecurity, and a longstanding 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, adult social care, and temporary accommodation.
“We are adopting creative strategies but certain measures take time to deliver both better provisions and cost efficiency,” said a council leader.
He continued: “There are demographic pressures which will continue to increase the pressures we have. As a unitary authority, we had a 91% cut in our central funding from 2010-24, which is very challenging.”
Countrywide Patterns and Projections
A survey of county councils recently further found council budgets being stretched by the growing number of young people and adults needing Send support.
A network of councils projected that council deficits will hit £4.4bn a year by the end of the decade, as they grapple to cope with rising needs.
Ministers have delayed planned reforms to the Send system until the coming year after a policy document setting out those reforms was recently delayed.
Deprivation and Funding Shortfalls
According to the most recent indices of deprivation (the Index of Multiple Deprivation) covering UK local authorities, several participating urban areas were among the most disadvantaged in England.
- “Participating urban centers like several major towns rank in the most deprived 30 across the country under the latest IMD measures,” noted the report.
“While only a single urban area is in the ten most deprived for deprived neighbourhoods nationally, cities are much more prone to be in the worst-off 20% of the nation. The data underscores the extent of challenges facing municipal officials across major urban centers in the next twelve months,” the report concluded.
“Council officials have been explicit about the necessity for a fair and sustainable funding system that accounts for and responds to the actual extent of deprivation and need,” said Michael Mordey.
“Without this, local authorities will continue to face difficult decisions around which vital provisions to allocate spend to, and which to cut, to the detriment of their communities.”
A fifth of local authorities have cut or compromised social care provision in the past 12 months, the study found.
