According to a recent poll of local authorities, UK councils are preparing to sell social clubs, athletic facilities, and shopping arcades as they rely on a fire sale of properties to balance the books.
Increasing Fiscal Pressures Prompt Asset Sales
The Key Cities Group for second-tier cities in the UK stated that 60% of local authorities are intending to dispose of properties to cover the escalating costs of adult and children’s social care.
Local governments have previously come under fire for selling public land and land to support their budgets, but they contend they must proceed to raise vital cash from asset sales or face insolvency.
The group said that a significant number of councils seeking to raise money from a fire sale of holdings represented “a clear change from 2024, when the majority (six in ten) of local leaders said they would focus on restructuring services and utilising savings to weather increasing fiscal pressures.”
Detailed Examples of Proposed Sales
Medway Council in Kent announced its property management strategy included the sale of a shopping centre in a local town and a community venue in Rochester to raise £20m over five years.
- Gillingham golf club and business parks owned in two English counties, which all provide rental income for the authority, will also be sold under the strategy.
Local Levy Increases and Wider Financial Strains
The survey of local authorities in the key cities group, which covers Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of councils will need to raise local levies next spring to cover the rising cost of essential services, higher levels of homelessness, and a longstanding housing shortage.
Medway council said 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 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: “We face population challenges which will persist to add to the pressures we have. As a unitary authority, we had a 91% cut in our revenue support grant from over the past decade, which is extremely difficult.”
National Trends and Forecasts
A survey of regional authorities this week also found council budgets being stretched by the growing number of young people and older individuals requiring special educational assistance.
A network of councils projected that council deficits will reach 4.4 billion pounds a year by 2029, as they grapple to manage increased demand.
Ministers have delayed planned reforms to the Send system until next year after a white paper setting out those reforms has been postponed.
Deprivation and Financial Shortfalls
Based on the latest indices of deprivation (the Index of Multiple Deprivation) covering UK local authorities, many participating urban areas were among the most deprived in the country.
- “Participating urban centers like several major towns place in the top 30 nationally under the latest IMD measures,” said the report.
“Although only a single urban area is among the ten most deprived for disadvantaged communities countrywide, urban areas are far more likely to be in the worst-off 20% of the nation. The figures underscores the extent of difficulties confronting municipal officials across key cities in the coming year,” the analysis added.
“Council officials have been explicit about the necessity for a equitable and lasting funding system that reflects and addresses the actual extent of deprivation and demand,” stated a council leader.
“Lacking this, local authorities will continue to face impossible choices 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 last year, the study revealed.
