Based on a recent survey of local authorities, English councils are preparing to sell community centers, sports centres, and retail spaces as they bet on a fire sale of assets to stabilize finances.
Increasing Fiscal Challenges Prompt Asset Sales
The Key Cities Group representing major urban areas in England stated that 60% of councils are intending to sell assets to cover the escalating costs of adult and children’s social care.
Councils have in the past come under fire for disposing of public land and open spaces to support their finances, but they contend they must continue to generate essential revenue from asset sales or declare themselves bankrupt.
This coalition said that a significant number of authorities seeking to raise money from a quick sale of assets represented “a distinct shift from 2024, when the majority (60%) of municipal officials stated they would focus on restructuring services and using financial reserves to weather growing financial challenges.”
Detailed Cases of Proposed Disposals
Medway Council in southeast England announced its asset disposal plan featured the disposal of a shopping centre in Rainham and a social club in another town to generate £20m over the next half-decade.
- Gillingham golf club and commercial properties owned in Worcestershire and Suffolk, which all provide rental income for Medway council, will also be disposed of under the plan.
Council Tax Increases and Wider Fiscal Strains
The survey of local authorities in the key cities group, which covers Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of councils will have to raise council taxes next spring to cover the rising cost of core provisions, higher levels of housing insecurity, and a persistent accommodation deficit.
Medway council said it will proceed with asset sales after steep rises in the cost of youth support, special educational needs and disability (Send) provision, elderly and disability services, and temporary accommodation.
“We are adopting innovative approaches but certain measures require time to achieve both better provisions and financial savings,” stated a council leader.
He added: “There are demographic pressures which will continue to add to the strains 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 Patterns and Projections
A survey of county councils recently also found council budgets being stretched by the increasing figures of children and adults needing special educational assistance.
A network of councils projected that local shortfalls will reach £4.4bn a year by the end of the decade, as they grapple to cope with increased demand.
Government officials have delayed planned reforms to the special educational needs framework until next year after a white paper setting out those changes was recently delayed.
Disadvantage and Financial Shortfalls
According to the most recent indices of deprivation (the Index of Multiple Deprivation) covering English councils, many participating urban areas were among the most deprived in England.
- “Participating urban centers like several major towns rank in the most deprived 30 nationally under the latest IMD measures,” said the study.
“Although only a single urban area is among the ten most deprived for deprived neighbourhoods countrywide, cities are much more prone to be in the worst-off 20% of England. The figures underscores the scale of difficulties facing municipal officials across key cities in the next twelve months,” the report concluded.
“Local government leaders have been clear about the necessity for a equitable and lasting financial structure that accounts for and responds to the real levels of disadvantage and demand,” said Michael Mordey.
“Without 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 communities.”
One in five of councils have reduced or weakened care services in the last year, the study found.
