Based on a recent study of local authorities, English 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 Challenges Drive Asset Sales
A coalition of councils for second-tier cities in the UK stated that 60% of councils are intending to dispose of properties to cover the escalating costs of social services for vulnerable individuals.
Local governments have in the past faced criticism for disposing of playing fields and open spaces to support their finances, but they contend they must continue to generate essential revenue from property disposals or declare themselves bankrupt.
The group said that a high proportion of authorities attempting to generate funds from a fire sale of holdings marked “a clear change from 2024, when the largest share (60%) of municipal officials stated they would focus on service redesigns and utilising financial reserves to manage increasing financial challenges.”
Detailed Examples of Planned Sales
Medway Council in Kent announced its asset disposal plan featured the disposal of a shopping centre in a local town and a social club in Rochester to raise £20m over five years.
- Gillingham golf club and commercial properties owned in Worcestershire and Suffolk, which all generate rent for Medway council, will additionally be disposed of under the strategy.
Council Tax Increases and Broader Fiscal Strains
This research of councils in the key cities group, which includes several urban centers, also found that more than 70% of authorities will need to raise local levies next spring to cover the rising cost of essential services, increased rates of homelessness, and a longstanding accommodation deficit.
Medway council said it will proceed with asset sales after steep rises in the cost of youth support, support for vulnerable learners, adult social care, and temporary accommodation.
“We are taking innovative approaches but some of these take time to deliver both improved services and financial savings,” 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 revenue support grant from over the past decade, which is very challenging.”
Countrywide Trends and Projections
A survey of county councils this week further found council budgets being stretched by the increasing figures of children and adults needing special educational assistance.
A network of councils projected that local shortfalls will reach £4.4bn a year by 2029, as they grapple to manage increased demand.
Government officials have delayed planned reforms to the Send system until next year after a policy document outlining those reforms was recently delayed.
Deprivation and Funding Gaps
According to the latest indices of deprivation (the Index of Multiple Deprivation) covering UK local authorities, several participating urban areas were among the most disadvantaged in the country.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton rank in the top 30 across the country under the latest IMD measures,” said the study.
“Although only one key city is among the ten most deprived for disadvantaged communities countrywide, cities are much more prone to be in the worst-off 20% of England. The data highlights the extent of challenges confronting municipal officials across major urban centers in the next twelve months,” the analysis concluded.
“Council officials have been explicit about the necessity for a equitable and lasting funding system that reflects and addresses the actual extent of disadvantage and need,” stated Michael Mordey.
“Lacking this, councils will continue to face difficult decisions around which essential services to allocate spend to, and which to cut, to the disadvantage of their communities.”
One in five of local authorities have reduced or weakened care services in the past 12 months, the study found.
