According to a new study of municipal councils, UK councils are preparing to offload social clubs, athletic facilities, and shopping arcades as they rely on a rapid disposal of assets to balance the books.
Growing Financial Challenges Drive Asset Sales
The Key Cities Group for second-tier cities in the UK reported that six out of ten of local authorities are intending to sell assets to meet the escalating costs of adult and children’s social care.
Local governments have previously come under fire for disposing of playing fields and land to shore up their finances, but they argue they must continue to generate essential revenue from asset sales or face insolvency.
The group noted that a significant number of councils attempting to generate funds from a fire 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 using savings to manage increasing fiscal pressures.”
Detailed Examples of Proposed Disposals
Medway Council in Kent said its asset disposal plan featured the disposal of a retail complex in a local town and a community venue in another town to raise £20m over five years.
- Gillingham golf club and commercial properties held in two English counties, which all generate rent for Medway council, will additionally be disposed of under the strategy.
Council Tax Increases and Broader Financial Strains
The survey of local authorities in the key cities group, which includes several urban centers, further found that over seven in ten of councils will have to raise council taxes next spring to address the growing cost of core provisions, higher levels of homelessness, and a persistent accommodation deficit.
Medway council explained it will press ahead with asset sales after sharp increases in the cost of youth support, support for vulnerable learners, elderly and disability services, and temporary accommodation.
“We are adopting creative strategies but certain measures take time to deliver both improved services and financial savings,” said a council leader.
He added: “We face demographic pressures which will persist to add to the strains we have. As a unitary authority, we had a 91% cut in our revenue support grant from 2010-24, which is extremely difficult.”
National Patterns and Projections
A survey of regional authorities this week further found council budgets being strained by the growing number of children and older individuals requiring Send support.
The County Councils Network projected that council deficits will hit 4.4 billion pounds a year by 2029, as they grapple to manage rising needs.
Government officials have delayed scheduled changes to the Send system until next year after a white paper outlining those changes was recently delayed.
Disadvantage and Financial Gaps
According to the latest indices of deprivation (IMD) for English councils, many participating urban areas were included in the most deprived in England.
- “Member cities like several major towns rank in the most deprived 30 nationally under the latest deprivation indices,” noted the study.
“Although only a single urban area is in the ten most deprived for disadvantaged communities countrywide, urban areas are far more likely to be in the most deprived fifth of the nation. The figures highlights the extent of difficulties confronting municipal officials across key cities in the next twelve months,” the report concluded.
“Local government leaders have been explicit about the need for a fair and sustainable funding system that reflects and addresses the actual extent of deprivation and need,” said a council leader.
“Lacking this, local authorities will persist to face difficult decisions around which vital provisions to allocate spend to, and which to cut, to the disadvantage of their communities.”
One in five of local authorities have cut or compromised social care provision in the last year, the survey revealed.
