According to a recent study of municipal councils, UK councils are preparing to offload social clubs, athletic facilities, and retail spaces as they rely on a fire sale of assets to balance the books.
Increasing Fiscal Challenges Prompt Asset Sales
The Key Cities Group for second-tier cities in England stated that six out of ten of councils are planning to sell assets to cover the escalating costs of social services for vulnerable individuals.
Local governments have in the past faced criticism for selling playing fields and open spaces to shore up their budgets, but they contend they must continue to generate essential revenue from asset sales or face insolvency.
The group 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 majority (60%) of municipal officials stated they would prioritise restructuring services and using financial reserves to weather increasing fiscal pressures.”
Detailed Cases of Planned Sales
Medway Council in southeast England announced its asset disposal plan featured the sale of a retail complex in a local town and a social club in another town to generate £20m over five years.
- A local golf course and business parks held in two English counties, which all provide rental income for Medway council, will additionally be sold under the strategy.
Local Levy Rises and Broader Fiscal Strains
The survey of local authorities in the key cities group, which includes Sunderland, Southampton, Gloucester and Salford, also found that over seven in ten of councils will need to increase local levies next spring to address the rising cost of essential services, higher levels of homelessness, and a longstanding housing shortage.
Medway council said it will proceed with asset sales after steep rises in the cost of children services, support for vulnerable learners, elderly and disability services, and temporary accommodation.
“We are adopting innovative approaches but certain measures take time to deliver both improved services and financial savings,” stated Vince Maple.
He continued: “We face demographic pressures which will persist to increase the strains we have. As a unitary authority, we had a 91% cut in our revenue support grant from 2010-24, which is very challenging.”
Countrywide Trends and Projections
A survey of regional authorities this week further found council budgets being stretched by the growing number of young people and older individuals needing Send support.
A network of councils said that council deficits will reach £4.4bn a year by 2029, as they grapple to manage increased demand.
Government officials have put off planned reforms to the Send system until the coming year after a policy document outlining those changes was recently delayed.
Disadvantage and Funding Gaps
Based on the latest indices of deprivation (the Index of Multiple Deprivation) for UK local authorities, several key cities members were among the most disadvantaged in England.
- “Member cities like several major towns place in the most deprived 30 across the country under the latest deprivation indices,” said the study.
“While only one key city is in the top 10 for deprived neighbourhoods countrywide, cities are far more likely to be in the most deprived fifth of England. The figures underscores the extent of challenges facing local leaders across major urban centers in the coming year,” the analysis added.
“Council officials have been explicit about the necessity for a equitable and lasting financial structure that reflects and responds to the actual extent of disadvantage and demand,” stated a council leader.
“Lacking this, councils will persist to face difficult decisions around which vital provisions to fund, and which to reduce, to the detriment of their residents.”
One in five of councils have cut or compromised social care provision in the past 12 months, the study found.
