According to a new survey of local authorities, English councils are preparing to sell social clubs, sports centres, and retail spaces as they bet on a fire sale of properties to stabilize finances.
Growing Fiscal Challenges Prompt Asset Sales
A coalition of councils representing major urban areas in the UK stated that six out of ten of councils 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 playing fields and land to shore up their budgets, but they argue they must continue to raise vital cash from asset sales or face insolvency.
The group noted that a significant number of authorities attempting to generate funds from a quick sale of holdings marked “a distinct shift from 2024, when the majority (60%) of local leaders stated they would focus on service redesigns and using financial reserves to manage increasing fiscal pressures.”
Specific Examples of Proposed Sales
Medway Council in southeast England announced its property management strategy featured the disposal of a shopping centre in a local town and a social club in another town to generate £20m over five years.
- A local golf course and business parks held in two English counties, which all provide rental income for Medway council, will also be sold under the strategy.
Local Levy 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 councils will have to increase local levies next April to cover the rising cost of essential services, higher levels of housing insecurity, and a persistent accommodation deficit.
Medway council said it will proceed with asset sales after sharp increases 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 cost efficiency,” said a council leader.
He continued: “There are demographic pressures which will persist to add to the pressures we have. As a local government body, we had a drastic reduction in our central funding from over the past decade, which is extremely difficult.”
Countrywide Trends and Projections
Research of regional authorities this week further found local finances being strained by the growing number of children and adults needing Send support.
A network of councils projected that council deficits will reach £4.4bn a year by the end of the decade, as they struggle to cope with increased demand.
Ministers have put off scheduled changes to the Send system until the coming year after a white paper outlining those changes has been postponed.
Deprivation and Funding Shortfalls
Based on the most recent deprivation measures (the Index of Multiple Deprivation) for UK local authorities, many participating urban areas were among the most disadvantaged in the country.
- “Member cities like several major towns rank in the top 30 across the country under the latest IMD measures,” said the report.
“While only a single urban area is among the top 10 for disadvantaged communities nationally, cities are far more likely to be in the most deprived fifth of England. The data underscores the extent of challenges confronting local leaders across key cities in the next twelve months,” the analysis added.
“Local government leaders have been clear about the necessity for a equitable and lasting financial structure that accounts for and responds to the real levels of deprivation and need,” stated a council leader.
“Without this, councils will persist to face difficult decisions around which vital provisions to allocate spend to, and which to reduce, to the detriment of their communities.”
One in five of local authorities have reduced or weakened care services in the last year, the survey found.