Based on a recent study of local authorities, UK councils are planning to offload community centers, athletic facilities, and shopping arcades as they rely on a fire sale of properties to balance the books.
Increasing Fiscal Challenges Prompt Asset Sales
The Key Cities Group for second-tier cities in the UK reported that six out of ten of local authorities are planning to sell assets to meet the escalating costs of social services for vulnerable individuals.
Local governments have previously come under fire for disposing of public land and open spaces to support their budgets, but they contend they must continue to generate essential revenue from property disposals or face insolvency.
The group said that a high proportion of councils seeking to raise money from a fire sale of assets represented “a distinct shift from 2024, when the largest share (60%) of local leaders stated they would prioritise service redesigns and utilising financial reserves to manage increasing fiscal pressures.”
Detailed Examples of Planned Sales
One local authority in southeast England announced its property management strategy included the disposal of a retail complex in a local town and a social club in another town to generate £20m over the next half-decade.
- A local golf course and commercial properties owned in Worcestershire and Suffolk, which all provide rental income for the authority, will also be sold under the plan.
Council Tax Increases and Broader Fiscal Pressures
The survey of local authorities in the coalition, which covers Sunderland, Southampton, Gloucester and Salford, further found that over seven in ten of councils will have to raise council taxes next April to cover the rising cost of essential services, higher levels of housing insecurity, and a persistent housing shortage.
The authority said it will proceed with property disposals after sharp increases in the cost of youth support, special educational needs and disability (Send) provision, elderly and disability services, and short-term housing.
“We are taking innovative approaches but certain measures take time to achieve both improved services and cost efficiency,” stated Vince Maple.
He continued: “There are demographic pressures which will continue to add to the strains we have. As a local government body, 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 recently also found council budgets being strained by the growing number of children and adults needing special educational assistance.
The County Councils Network said that local shortfalls will hit £4.4bn a year by 2029, as they grapple to manage rising needs.
Government officials have delayed scheduled changes to the Send system until the coming year after a policy document setting out those reforms was recently delayed.
Deprivation and Funding Shortfalls
According to the most recent deprivation measures (the Index of Multiple Deprivation) covering English councils, several participating urban areas were among the most disadvantaged in the country.
- “Participating urban centers like several major towns place in the most deprived 30 nationally under the latest deprivation indices,” said the report.
“While only a single urban area is in the ten most deprived for disadvantaged communities nationally, urban areas are much more prone to be in the worst-off 20% of the nation. The figures underscores the extent of difficulties facing municipal officials across key cities in the coming year,” the report concluded.
“Council officials have been clear about the necessity for a fair and sustainable financial structure that accounts for and responds to the actual extent of deprivation and need,” said a council leader.
“Without this, local authorities will persist to face impossible choices around which vital provisions to allocate spend to, and which to cut, to the detriment of their residents.”
A fifth of councils have cut or compromised care services in the last year, the survey found.
