Based on a latest survey of local authorities, English councils are preparing to offload community centers, athletic facilities, and shopping arcades as they bet on a fire sale of properties to balance the books.
Increasing Financial Challenges Drive Asset Sales
The Key Cities Group for second-tier cities in England stated that 60% of local authorities are intending to sell assets to cover the escalating costs of social services for vulnerable individuals.
Local governments have in the past come under fire for selling playing fields and open spaces to support their budgets, but they argue they must continue to generate essential revenue from asset sales or face insolvency.
The group noted that a high proportion of councils seeking to raise money from a quick sale of holdings marked “a distinct shift from 2024, when the majority (six in ten) of local leaders said they would focus on service redesigns and using financial reserves to weather growing financial challenges.”
Detailed Cases of Proposed Disposals
Medway Council in southeast England said its asset disposal plan included the disposal of a retail complex in Rainham and a community venue in Rochester to raise £20m over the next half-decade.
- Gillingham golf club and business parks owned in two English counties, which all provide rental income for Medway council, will also be sold under the strategy.
Council Tax Increases and Broader Financial Pressures
This research of councils in the key cities group, which includes Sunderland, Southampton, Gloucester and Salford, also found that more than 70% of councils will have to increase local levies next April to cover the growing cost of essential services, higher levels of housing insecurity, and a persistent housing shortage.
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 achieve both improved services and cost efficiency,” said a council leader.
He added: “We face demographic pressures which will continue to increase the pressures we have. As a local government body, we had a drastic reduction in our revenue support grant from over the past decade, which is extremely difficult.”
Countrywide Patterns and Forecasts
Research of regional authorities this week further 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 cope with increased demand.
Ministers have delayed planned reforms to the Send system until the coming year after a policy document outlining those changes has been postponed.
Disadvantage and Financial Shortfalls
Based on the latest indices of deprivation (the Index of Multiple Deprivation) for UK local authorities, several participating urban areas were included in the most disadvantaged in England.
- “Member cities like several major towns rank in the most deprived 30 nationally under the latest IMD measures,” noted the study.
“While only a single urban area is in the ten most deprived for deprived neighbourhoods nationally, cities are far more likely to be in the most deprived fifth of the nation. The figures highlights the extent of challenges facing municipal officials across major urban centers in the next twelve months,” the analysis added.
“Council officials have been explicit about the necessity for a equitable and lasting funding system that accounts for and addresses the actual extent of deprivation and need,” said Michael Mordey.
“Lacking this, councils 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 care services in the past 12 months, the study found.
