Based on a recent study of local authorities, UK councils are preparing to offload community centers, sports centres, and shopping arcades as they rely on a fire sale of assets to stabilize finances.
Growing Financial Pressures Prompt Asset Sales
A coalition of councils for major urban areas in the UK reported that six out of ten of local authorities are intending to dispose of properties to cover the rising costs of adult and children’s social care.
Local governments have previously faced criticism for disposing of public land and open spaces to shore up their finances, but they argue they must continue to raise vital cash from asset sales or face insolvency.
This coalition noted that a high proportion of authorities attempting to raise money from a fire sale of holdings represented “a clear change from 2024, when the majority (60%) of municipal officials said they would prioritise restructuring services and utilising financial reserves to manage increasing financial challenges.”
Detailed Examples of Planned Sales
Medway Council in southeast England announced its property management strategy included the sale 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 business parks held in Worcestershire and Suffolk, which all generate rent for Medway council, will additionally be sold under the strategy.
Council Tax Increases and Wider Fiscal Pressures
This research of councils in the key cities group, which includes Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of councils will have to raise local levies next April to address the growing cost of core provisions, higher levels of housing insecurity, and a longstanding housing shortage.
Medway council said it will press ahead with asset sales after steep rises in the cost of youth support, special educational needs and disability (Send) provision, adult social care, and temporary accommodation.
“We are adopting creative strategies but certain measures take time to achieve both improved services and cost efficiency,” said Vince Maple.
He continued: “We face demographic pressures which will persist to add to the strains 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.”
National Trends and Projections
Research of county councils this week also found local finances being strained by the growing number of young people and older individuals needing Send support.
The County Councils Network said that council deficits will reach £4.4bn a year by the end of the decade, as they grapple to manage increased demand.
Government officials have delayed scheduled changes to the Send system until next year after a white paper setting out those reforms was recently delayed.
Disadvantage and Funding Gaps
According to the latest indices of deprivation (the Index of Multiple Deprivation) for English councils, many key cities members were among the most deprived in England.
- “Member cities like several major towns place in the most deprived 30 across the country under the latest IMD measures,” noted the study.
“While only one key city is in the ten most deprived for deprived neighbourhoods countrywide, urban areas are far more likely to be in the worst-off 20% of England. The data underscores the scale of challenges confronting municipal officials across key cities in the next twelve months,” the report concluded.
“Local government leaders have been explicit about the necessity for a fair and sustainable funding system that reflects and addresses the actual extent of disadvantage and need,” stated Michael Mordey.
“Without this, councils will persist to face difficult decisions around which essential services 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 last year, the study revealed.
