Based on a new study of municipal councils, UK councils are preparing to sell community centers, athletic facilities, and retail spaces as they bet on a rapid disposal of assets to balance the books.
Growing Financial Challenges Prompt Asset Sales
A coalition of councils representing second-tier cities in the UK reported that six out of ten of local authorities are planning to dispose of properties to meet the escalating costs of social services for vulnerable individuals.
Councils have previously faced criticism for selling playing fields and land to support their budgets, but they argue they must proceed to raise vital cash from asset sales or declare themselves bankrupt.
The group noted that a high proportion of authorities attempting to raise money from a fire sale of assets represented “a distinct shift from 2024, when the majority (60%) of municipal officials stated they would prioritise service redesigns and using financial reserves to manage growing financial challenges.”
Detailed Examples of Proposed Sales
One local authority in southeast England announced its property management strategy included the disposal of a shopping centre in a local town and a community venue in another town to generate £20m over the next half-decade.
- A local golf course and commercial properties owned in Worcestershire and Suffolk, which all provide rental income for the authority, will also be disposed of under the strategy.
Council Tax Increases and Wider Financial Strains
The survey of local authorities in the coalition, which includes Sunderland, Southampton, Gloucester and Salford, also found that more than 70% of councils will have to raise local levies next spring to cover the rising cost of core provisions, higher levels of homelessness, and a persistent housing shortage.
The authority said it will proceed with property disposals after sharp increases in the cost of children services, special educational needs and disability (Send) provision, adult social care, and short-term housing.
“We are taking creative strategies but certain measures require time to achieve both improved services and financial savings,” stated a council leader.
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 revenue support grant from 2010-24, which is very challenging.”
Countrywide Trends and Projections
Research of regional authorities this week also found local finances being stretched by the growing number of young people and adults requiring special educational assistance.
The County Councils Network projected that council deficits will hit £4.4bn a year by 2029, as they grapple to cope with increased demand.
Government officials have put off scheduled changes to the special educational needs framework until next year after a white paper setting out those changes was recently delayed.
Disadvantage and Funding Shortfalls
Based on the latest indices of deprivation (the Index of Multiple Deprivation) for English councils, several key cities members were included in the most deprived in the country.
- “Participating urban centers like several major towns place in the most deprived 30 nationally under the latest deprivation indices,” noted the report.
“Although only a single urban area is in the top 10 for disadvantaged communities nationally, urban areas are far more likely to be in the worst-off 20% of the nation. The data highlights the scale of difficulties facing local leaders across major urban centers in the next twelve months,” the report added.
“Local government leaders have been explicit about the necessity for a equitable and lasting financial structure that accounts for and addresses the actual extent of deprivation and demand,” said Michael Mordey.
“Without this, local authorities will continue to face difficult decisions around which vital provisions to fund, and which to cut, to the detriment of their residents.”
One in five of councils have reduced or weakened care services in the last year, the survey revealed.
