Based on a recent poll of municipal councils, English councils are preparing to sell social clubs, athletic facilities, and shopping arcades as they bet on a fire sale of properties to balance the books.
Growing Fiscal Pressures Drive Asset Sales
The Key Cities Group representing second-tier cities in the UK reported that six out of ten of local authorities are planning to sell assets to cover the escalating costs of social services for vulnerable individuals.
Local governments have in the past come under fire for disposing of public land and land to support their budgets, but they argue they must continue to raise vital cash from property disposals or face insolvency.
The group said that a high proportion of authorities attempting to raise money from a fire sale of assets represented “a distinct shift from 2024, when the largest share (six in ten) of municipal officials said they would prioritise restructuring services and utilising savings to manage growing fiscal pressures.”
Specific Cases of Proposed Sales
One local authority in southeast England announced its asset disposal plan included the sale of a shopping centre in a local town and a social club in another town to raise £20m over the next half-decade.
- A local golf course and commercial properties owned in two English counties, which all provide rental income for the authority, will also be sold under the plan.
Local Levy Increases and Broader Financial Pressures
This research of local authorities in the key cities group, which includes Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of authorities will have to increase local levies next April to address the rising cost of essential services, increased rates of housing insecurity, and a persistent accommodation deficit.
The authority said it will press ahead with property disposals after steep rises in the cost of youth support, special educational needs and disability (Send) provision, adult social care, and short-term housing.
“We are taking innovative approaches but certain measures require time to achieve both better provisions and cost efficiency,” said a council leader.
He added: “There are demographic pressures which will continue to add to the pressures we have. As a unitary authority, we had a drastic reduction in our revenue support grant from 2010-24, which is extremely difficult.”
National Patterns and Forecasts
Research of regional authorities recently further found local finances being strained by the increasing figures of young people and adults requiring Send support.
The County Councils Network projected that local shortfalls will hit £4.4bn a year by 2029, as they struggle to cope with rising needs.
Government officials have put off planned reforms to the special educational needs framework until next year after a white paper outlining those reforms has been postponed.
Deprivation and Funding Shortfalls
According to the latest deprivation measures (the Index of Multiple Deprivation) covering English councils, many participating urban areas were included in the most deprived in the country.
- “Participating urban centers like several major towns rank in the most deprived 30 nationally under the latest IMD measures,” noted the report.
“Although only one key city is in the top 10 for deprived neighbourhoods countrywide, urban areas are far more likely to be in the worst-off 20% of the nation. The data highlights the scale of challenges confronting local leaders across major urban centers in the next twelve months,” the analysis concluded.
“Council officials have been explicit about the necessity for a fair and sustainable funding system that reflects and addresses the real levels of deprivation and demand,” said Michael Mordey.
“Lacking this, councils will persist to face impossible choices around which essential services to allocate spend to, and which to cut, to the detriment of their residents.”
A fifth of local authorities have reduced or weakened care services in the past 12 months, the survey found.
