Based on a recent poll of municipal councils, UK councils are planning to offload community centers, sports centres, and shopping arcades as they bet on a rapid disposal of properties to balance the books.
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 rising costs of social services for vulnerable individuals.
Councils have in the past faced criticism for disposing of playing fields and open spaces to support their budgets, but they argue they must continue to generate essential revenue from property disposals or face insolvency.
The group said that a high proportion of authorities attempting to generate funds from a fire sale of assets marked “a distinct shift from 2024, when the majority (six in ten) of municipal officials stated they would prioritise restructuring services and utilising financial reserves to manage growing financial challenges.”
Specific Cases of Proposed Sales
Medway Council in southeast England announced its asset disposal plan included the disposal of a retail complex in a local town and a social club in Rochester to generate £20m over the next half-decade.
- Gillingham golf club and business parks held in Worcestershire and Suffolk, which all provide rental income for the authority, will also be disposed of under the strategy.
Council Tax Rises and Broader Financial Strains
This research of local authorities in the coalition, which includes several urban centers, further found that over seven in ten of authorities will need to increase council taxes next April to address the growing cost of essential services, higher levels of homelessness, and a longstanding housing shortage.
Medway council 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 some of these take time to deliver both improved services and cost efficiency,” stated Vince Maple.
He added: “There are demographic pressures which will continue to increase the strains we have. As a unitary authority, we had a drastic reduction in our revenue support grant from 2010-24, which is extremely difficult.”
National Patterns and Forecasts
Research of county councils this week further found council budgets being strained by the growing number of young people and adults needing Send support.
The County Councils Network said that council deficits will hit £4.4bn a year by the end of the decade, as they struggle to manage rising needs.
Government officials have delayed planned reforms to the Send system until next year after a white paper setting out those reforms was recently delayed.
Disadvantage and Funding Shortfalls
According to the latest indices of deprivation (IMD) for English councils, many key cities members were included in the most deprived in England.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the most deprived 30 nationally under the latest IMD measures,” noted the study.
“Although only one key city is among the top 10 for disadvantaged communities countrywide, cities are far more likely to be in the most deprived fifth of the nation. The figures underscores the scale of difficulties facing municipal officials across major urban centers in the next twelve months,” the report concluded.
“Council officials have been clear about the necessity for a fair and sustainable funding system that accounts for and addresses the real levels of deprivation and need,” stated a council leader.
“Without this, local authorities will persist to face difficult decisions around which vital provisions to allocate spend to, and which to reduce, to the disadvantage of their residents.”
One in five of local authorities have cut or compromised social care provision in the past 12 months, the study revealed.
