According to a recent study of local authorities, UK councils are preparing to offload social clubs, athletic facilities, and retail spaces as they bet on a fire sale of assets to stabilize finances.
Increasing Fiscal Pressures Prompt Asset Sales
The Key Cities Group representing second-tier cities in the UK reported that 60% of local authorities are planning to dispose of properties to meet the escalating costs of social services for vulnerable individuals.
Local governments have in the past faced criticism for disposing of public land and open spaces to shore up their finances, but they argue they must proceed to generate essential revenue from property disposals or declare themselves bankrupt.
This coalition noted that a significant number of authorities seeking to raise money from a fire sale of assets represented “a clear change from 2024, when the majority (six in ten) of local leaders stated they would focus on service redesigns and using savings to weather increasing fiscal pressures.”
Specific Examples of Proposed Sales
Medway Council in Kent said its asset disposal plan featured the disposal of a shopping centre in Rainham and a social club in Rochester 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 disposed of under the plan.
Council Tax Rises and Broader Financial Strains
This research of councils in the key cities group, which covers Sunderland, Southampton, Gloucester and Salford, further found that over seven in ten of councils will need to increase council taxes next spring to cover the growing cost of essential services, higher levels of homelessness, and a longstanding accommodation deficit.
The authority explained it will press ahead with asset sales after steep rises in the cost of youth support, special educational needs and disability (Send) provision, adult social care, and short-term housing.
“We are taking innovative approaches but some of these require time to achieve both improved services and financial savings,” stated a council leader.
He added: “We face population challenges which will continue to add to the strains we have. As a unitary authority, we had a drastic reduction in our revenue support grant from over the past decade, which is very challenging.”
National Patterns and Projections
A survey of regional authorities this week also found local finances being strained by the increasing figures of children and adults needing special educational assistance.
The County Councils Network projected that council deficits will hit £4.4bn a year by 2029, as they struggle to manage rising needs.
Ministers have put off planned reforms to the Send system until the coming year after a white paper outlining those reforms was recently delayed.
Disadvantage and Funding Shortfalls
According to the most recent deprivation measures (the Index of Multiple Deprivation) for UK local authorities, many participating urban areas were included in the most disadvantaged in the country.
- “Member cities like several major towns place in the top 30 nationally under the latest deprivation indices,” said the report.
“While only a single urban area is among the top 10 for deprived neighbourhoods nationally, cities are far more likely to be in the most deprived fifth of England. The data underscores the extent of challenges facing local leaders across major urban centers in the next twelve months,” the report added.
“Local government leaders have been clear about the necessity for a equitable and lasting funding system that accounts for and addresses the actual extent of disadvantage and need,” said a council leader.
“Lacking this, local authorities will persist to face difficult decisions around which essential services to allocate spend to, and which to reduce, to the disadvantage of their communities.”
One in five of councils have reduced or weakened care services in the past 12 months, the survey revealed.
