Based on a new study of municipal councils, UK councils are planning to sell community centers, sports centres, and retail spaces as they bet on a rapid disposal of properties to stabilize finances.
Growing Fiscal Pressures Prompt Asset Sales
The Key Cities Group representing second-tier cities in the UK reported that six out of ten of councils are intending to dispose of properties to meet the escalating costs of adult and children’s social care.
Councils have in the past come under fire for disposing of playing fields and open spaces to support their finances, but they argue they must continue to raise vital cash from asset sales or declare themselves bankrupt.
This coalition noted that a significant number of councils seeking to generate funds from a fire sale of holdings represented “a distinct shift from 2024, when the majority (six in ten) of local leaders said they would focus on service redesigns and utilising savings to weather growing financial challenges.”
Detailed Examples of Planned Disposals
Medway Council in Kent said its asset disposal plan included the disposal of a shopping centre in Rainham and a social club in Rochester to raise £20m over the next half-decade.
- A local golf course and commercial properties owned in two English counties, which all generate rent for the authority, will additionally be disposed of under the plan.
Local Levy Increases and Broader Financial Pressures
This research of councils in the key cities group, which includes several urban centers, further found that more than 70% of councils will have to increase council taxes next spring to address the growing cost of core provisions, higher levels of homelessness, and a longstanding housing shortage.
The authority said it will proceed with property disposals after steep rises in the cost of youth support, special educational needs and disability (Send) provision, elderly and disability services, and short-term housing.
“We are taking innovative approaches but certain measures require time to deliver both improved services and cost efficiency,” said a council leader.
He continued: “We face demographic pressures which will continue to increase the pressures we have. As a local government body, we had a 91% cut in our revenue support grant from 2010-24, which is extremely difficult.”
National Trends and Forecasts
Research of regional authorities recently further found council budgets being strained by the growing number of children and adults needing special educational assistance.
A network of councils projected that council deficits will hit £4.4bn a year by the end of the decade, as they grapple to cope with rising needs.
Government officials have delayed planned reforms to the special educational needs framework until next year after a policy document setting out those changes was recently delayed.
Deprivation and Funding Shortfalls
Based on the most recent indices of deprivation (the Index of Multiple Deprivation) covering English councils, several key cities members were among the most disadvantaged in England.
- “Participating urban centers like several major towns rank in the top 30 across the country under the latest IMD measures,” said the study.
“While only one key city is in the ten most deprived for deprived neighbourhoods nationally, urban areas are far more likely to be in the most deprived fifth of England. The figures underscores the extent of challenges confronting municipal officials across key cities in the coming year,” the analysis added.
“Council officials have been clear about the necessity for a fair and sustainable financial structure that reflects and responds to the real levels of disadvantage and demand,” stated a council leader.
“Without this, councils will persist to face difficult decisions around which vital provisions to fund, and which to cut, to the detriment of their communities.”
A fifth of councils have cut or compromised care services in the past 12 months, the survey revealed.
