According to a new study of municipal councils, English councils are planning to offload community centers, sports centres, and shopping arcades as they rely on a fire sale of assets to stabilize finances.
Growing Financial Challenges Drive Asset Sales
The Key Cities Group representing major urban areas in the UK reported that 60% 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 land to support their finances, but they argue they must proceed to raise vital cash from asset sales or face insolvency.
The group noted that a significant number of councils seeking to raise money from a quick sale of holdings marked “a distinct shift from 2024, when the largest share (six in ten) of local leaders said they would focus on service redesigns and using savings to weather increasing financial challenges.”
Detailed Examples of Proposed Sales
Medway Council in Kent said its asset disposal plan featured the sale of a shopping centre in Rainham and a social club in another town to generate 20 million pounds over five years.
- Gillingham golf club and business parks held in two English counties, which all generate rent for the authority, will also be sold under the strategy.
Council Tax Increases and Broader Fiscal Pressures
This research of councils in the key cities group, which includes several urban centers, also found that more than 70% of councils will have to increase local levies next April to cover the growing cost of essential services, higher levels of housing insecurity, and a persistent housing shortage.
The authority explained 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 short-term housing.
“We are taking creative strategies but some of these require time to deliver both improved services and cost efficiency,” said Vince Maple.
He added: “There are population challenges which will continue to increase the strains we have. As a local government body, we had a 91% cut in our central funding from over the past decade, which is very challenging.”
National Patterns and Forecasts
Research of regional authorities recently also found local finances being stretched by the increasing figures of young people and older individuals requiring Send support.
A network of councils projected that council deficits will hit £4.4bn a year by 2029, as they grapple to cope with rising needs.
Ministers have delayed planned reforms to the Send system until next year after a white paper setting out those changes has been postponed.
Deprivation and Funding Shortfalls
Based on the latest deprivation measures (the Index of Multiple Deprivation) for UK local authorities, many participating urban areas were among the most disadvantaged in England.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton rank in the most deprived 30 nationally under the latest deprivation indices,” said the report.
“While only one key city is in the ten most deprived for disadvantaged communities nationally, urban areas are far more likely to be in the most deprived fifth of England. The figures underscores the extent of challenges confronting municipal officials across major urban centers in the coming year,” the report added.
“Local government leaders have been clear about the necessity for a equitable and lasting financial structure that reflects and responds to the real levels of deprivation and need,” said Michael Mordey.
“Lacking this, councils will continue to face difficult decisions around which essential services to fund, and which to reduce, to the disadvantage of their residents.”
One in five of councils have reduced or weakened care services in the last year, the survey revealed.
