According to a recent study of municipal councils, English councils are planning to offload social clubs, athletic facilities, and shopping arcades as they bet on a fire sale of properties to stabilize finances.
Increasing Financial Pressures Drive Asset Sales
The Key Cities Group representing major urban areas in England reported that 60% of councils are intending to dispose of properties to cover the rising costs of social services for vulnerable individuals.
Councils have previously faced criticism for selling playing fields and open spaces to shore up their budgets, but they contend they must continue to raise vital cash from property disposals or declare themselves bankrupt.
This coalition said that a significant number of councils seeking to generate funds from a quick sale of holdings marked “a distinct shift from 2024, when the largest share (60%) of municipal officials said they would focus on restructuring services and utilising financial reserves to weather growing financial challenges.”
Detailed Examples of Proposed Disposals
One local authority in southeast England announced its property management strategy included the sale of a retail complex in Rainham and a community venue in another town to raise 20 million pounds over five years.
- A local golf course and commercial properties held in two English counties, which all provide rental income for Medway council, will additionally be sold under the plan.
Council Tax Increases and Broader Fiscal Pressures
This research of councils in the key cities group, which covers Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of councils will need to increase council taxes next spring to address the rising cost of essential services, higher levels of housing insecurity, and a persistent housing shortage.
Medway council said it will press ahead with property disposals after steep rises in the cost of youth support, support for vulnerable learners, elderly and disability services, and temporary accommodation.
“We are taking innovative approaches but certain measures require time to deliver both improved services and cost efficiency,” said Vince Maple.
He continued: “We face population challenges which will continue to increase the strains we have. As a unitary authority, we had a 91% cut in our central funding from over the past decade, which is very challenging.”
National Patterns and Forecasts
Research of regional authorities recently also found council budgets being strained by the increasing figures of children and adults needing special educational assistance.
The County Councils Network said that local shortfalls will hit £4.4bn a year by the end of the decade, as they grapple to manage increased demand.
Ministers have put off scheduled changes to the special educational needs framework until next year after a white paper outlining those reforms was recently delayed.
Disadvantage and Funding Shortfalls
According to the latest indices of deprivation (the Index of Multiple Deprivation) for UK local authorities, many participating urban areas were included in the most disadvantaged in the country.
- “Member cities like several major towns rank in the most deprived 30 nationally under the latest IMD measures,” said the report.
“While only one key city is among the top 10 for disadvantaged communities nationally, cities are far more likely to be in the most deprived fifth of England. The figures highlights the scale of difficulties confronting local leaders across key cities in the next twelve months,” the analysis concluded.
“Local government leaders have been clear about the need for a equitable and lasting funding system that reflects and responds to the real levels of deprivation and demand,” said Michael Mordey.
“Without this, local authorities will persist to face impossible choices around which essential services to allocate spend to, and which to reduce, to the detriment of their communities.”
One in five of councils have cut or compromised care services in the past 12 months, the survey revealed.
