Based on a recent study of local authorities, English councils are preparing to sell social clubs, sports centres, and retail spaces as they rely on a rapid disposal of assets to balance the books.
Growing Financial Challenges Drive Asset Sales
A coalition of councils for second-tier cities in the UK stated that six out of ten of local authorities are planning to sell assets to cover the escalating costs of adult and children’s social care.
Local governments have in the past faced criticism for selling public land and land to support their budgets, but they contend they must proceed to raise vital cash from asset sales or face insolvency.
This coalition said that a significant number of authorities seeking to raise money from a fire sale of assets marked “a distinct shift from 2024, when the majority (60%) of local leaders stated they would focus on service redesigns and utilising savings to weather growing financial challenges.”
Specific Cases of Proposed Disposals
One local authority in Kent announced its asset disposal plan featured the disposal of a shopping centre in Rainham and a community venue in Rochester to raise £20m over the next half-decade.
- Gillingham golf club and commercial properties held in two English counties, which all generate rent for Medway council, will additionally be disposed of under the plan.
Local Levy Increases and Wider Fiscal Pressures
This research of local authorities in the coalition, which includes Sunderland, Southampton, Gloucester and Salford, further found that over seven in ten of councils will have to raise council taxes next April to address the rising cost of core provisions, higher levels of homelessness, and a persistent accommodation deficit.
The authority explained it will press ahead with property disposals after steep rises in the cost of children services, special educational needs and disability (Send) provision, adult social care, and temporary accommodation.
“We are taking innovative approaches but some of these take time to achieve both improved services and financial savings,” stated Vince Maple.
He added: “We face demographic pressures which will continue to increase the pressures we have. As a unitary authority, we had a 91% cut in our central funding from over the past decade, which is very challenging.”
National Trends and Forecasts
Research of county councils recently further found council budgets being stretched by the increasing figures of young people and older individuals requiring Send support.
The County Councils Network said that council deficits will reach 4.4 billion pounds a year by the end of the decade, as they grapple to cope with increased demand.
Ministers have put off scheduled changes to the special educational needs framework until the coming year after a white paper setting out those changes was recently delayed.
Deprivation and Funding Gaps
Based on the most recent deprivation measures (IMD) for UK local authorities, many participating urban areas were among the most disadvantaged in England.
- “Participating urban centers like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the most deprived 30 nationally under the latest IMD measures,” noted the study.
“Although only one key city is among the top 10 for disadvantaged communities nationally, cities are much more prone to be in the most deprived fifth of England. The figures highlights the scale of challenges facing municipal officials across key cities in the coming year,” the analysis added.
“Local government leaders have been explicit about the necessity for a fair and sustainable funding system that reflects and addresses the actual extent of disadvantage and need,” said a council leader.
“Lacking this, councils will continue to face difficult decisions around which essential services to allocate spend to, and which to cut, to the disadvantage of their communities.”
One in five of local authorities have cut or compromised care services in the past 12 months, the study revealed.
