According to a recent survey of local authorities, English councils are preparing to sell social clubs, sports centres, and shopping arcades as they bet on a fire sale of properties to stabilize finances.
Growing Financial Pressures Drive Asset Sales
A coalition of councils representing major urban areas in England reported that 60% of councils are intending to dispose of properties to meet the rising costs of social services for vulnerable individuals.
Local governments have previously come under fire for selling public land and land to support their budgets, but they argue they must proceed to raise vital cash from property disposals or face insolvency.
This coalition said that a high proportion of councils seeking to generate funds from a fire sale of holdings represented “a distinct shift from 2024, when the largest share (six in ten) of local leaders said they would focus on service redesigns and utilising savings to weather increasing financial challenges.”
Specific Examples of Proposed Disposals
One local authority in southeast England announced its property management strategy featured the sale of a retail complex in Rainham and a community venue in another town to raise £20m over five years.
- A local golf course and business parks owned in two English counties, which all provide rental income for Medway council, will also be sold under the plan.
Council Tax Increases and Wider Fiscal Pressures
The survey of councils in the key cities group, which includes Sunderland, Southampton, Gloucester and Salford, further found that over seven in ten of councils will have to increase council taxes next April to cover the growing cost of core provisions, increased rates of homelessness, and a persistent housing shortage.
Medway council explained it will press ahead with asset sales after sharp increases in the cost of youth support, special educational needs and disability (Send) provision, elderly and disability services, and temporary accommodation.
“We are taking innovative approaches but some of these require time to deliver both improved services and financial savings,” said Vince Maple.
He added: “There are demographic pressures which will persist to add to the strains we have. As a local government body, we had a drastic reduction in our central funding from 2010-24, which is very challenging.”
National Trends and Forecasts
Research of county councils this week further found local finances being stretched by the increasing figures of children and adults requiring special educational assistance.
A network of councils said that council deficits will hit 4.4 billion pounds a year by the end of the decade, as they struggle to cope with rising needs.
Government officials have delayed planned reforms to the Send system until the coming year after a policy document setting out those changes has been postponed.
Deprivation and Funding Shortfalls
Based on the most recent indices of deprivation (the Index of Multiple Deprivation) covering UK local authorities, many participating urban areas were among 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 report.
“Although only a single urban area is among the top 10 for deprived neighbourhoods nationally, urban areas are much more prone to be in the most deprived fifth of the nation. The data underscores the extent of challenges facing local leaders 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 financial structure that reflects and responds to the actual extent of disadvantage and demand,” said a council leader.
“Lacking this, councils will persist to face difficult decisions around which essential services to fund, and which to cut, to the detriment of their residents.”
A fifth of local authorities have cut or compromised social care provision in the last year, the study found.
