According to a new study of municipal councils, English councils are planning to offload social clubs, sports centres, and shopping arcades as they rely on a fire sale of assets to stabilize finances.
Increasing Fiscal Pressures Drive Asset Sales
The Key Cities Group for second-tier cities in England reported that 60% of councils are planning to sell assets to meet the escalating costs of adult and children’s social care.
Local governments have in the past come under fire for selling playing fields and land to support their finances, but they argue they must proceed to raise vital cash from asset sales or face insolvency.
This coalition noted that a significant number of authorities seeking to generate funds from a fire sale of assets represented “a distinct shift from 2024, when the largest share (60%) of local leaders said they would prioritise restructuring services and using financial reserves to weather increasing financial challenges.”
Detailed Examples of Proposed Disposals
One local authority in Kent announced its property management strategy featured the disposal of a retail complex in a local town and a social club in Rochester to generate £20m over the next half-decade.
- A local golf course and business parks held in two English counties, which all generate rent for Medway council, will also be disposed of under the strategy.
Local Levy Rises and Broader Fiscal Strains
The survey of councils in the key cities group, which covers Sunderland, Southampton, Gloucester and Salford, further found that over seven in ten of councils will need to raise council taxes next April to cover the growing cost of essential services, increased rates of housing insecurity, and a longstanding housing shortage.
The authority explained it will press ahead with asset sales after sharp increases in the cost of youth support, special educational needs and disability (Send) provision, adult social care, and short-term housing.
“We are adopting innovative approaches but certain measures require time to deliver both better provisions and financial savings,” stated a council leader.
He continued: “We face demographic pressures which will continue to increase the pressures we have. As a unitary authority, we had a drastic reduction in our revenue support grant from over the past decade, which is very challenging.”
Countrywide Trends and Projections
A survey of county councils this week also found council budgets being stretched by the growing number of young people and adults needing special educational assistance.
The County Councils Network said that council deficits will reach 4.4 billion pounds a year by the end of the decade, as they struggle to cope with rising needs.
Ministers have put off scheduled changes to the special educational needs framework until the coming year after a policy document outlining those reforms has been postponed.
Deprivation and Funding Shortfalls
Based on the latest indices of deprivation (the Index of Multiple Deprivation) for English councils, several key cities members were among the most disadvantaged in the country.
- “Participating urban centers like several major towns rank in the top 30 nationally under the latest deprivation indices,” said the study.
“Although only a single urban area is in the ten most deprived for disadvantaged communities countrywide, urban areas are far more likely to be in the most deprived fifth of the nation. The figures underscores the extent of difficulties facing local leaders across major urban centers in the next twelve months,” the analysis concluded.
“Council officials have been clear about the need for a equitable and lasting financial structure that reflects and responds to the real levels of disadvantage and demand,” stated a council leader.
“Lacking this, local authorities will continue to face difficult decisions around which vital provisions to fund, and which to cut, to the disadvantage of their residents.”
One in five of local authorities have reduced or weakened care services in the last year, the study revealed.
