According to a recent study of local authorities, UK councils are planning to offload community centers, athletic facilities, and retail spaces as they bet on a fire sale of assets to balance the books.
Increasing Fiscal Pressures Drive Asset Sales
A coalition of councils representing major urban areas in the UK stated that six out of ten of local authorities are intending to dispose of properties to meet the escalating costs of adult and children’s social care.
Local governments have in the past faced criticism for selling playing fields and land to support their budgets, but they argue they must proceed to raise vital cash from asset sales or face insolvency.
This coalition said that a high proportion of authorities seeking to raise money from a fire sale of assets represented “a distinct shift from 2024, when the majority (six in ten) of local leaders stated they would focus on restructuring services and using savings to weather increasing financial challenges.”
Detailed Examples of Proposed Disposals
One local authority in Kent announced its asset disposal plan featured the disposal of a retail complex in Rainham and a social club in another town 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 also be disposed of under the plan.
Local Levy Rises and Broader Fiscal Strains
This research of local authorities in the coalition, which includes Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of authorities will need to increase local levies next spring to address the growing cost of essential services, higher levels of homelessness, and a longstanding accommodation deficit.
The authority explained it will proceed with property disposals after sharp increases in the cost of youth support, support for vulnerable learners, adult social care, and temporary accommodation.
“We are taking creative strategies but some of these take time to achieve both better provisions and financial savings,” stated a council leader.
He continued: “We face demographic pressures which will continue to add to 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 Patterns and Projections
Research of regional authorities this week also found local finances being stretched by the growing number of children and adults requiring Send support.
A network of councils projected that council deficits will hit £4.4bn a year by the end of the decade, as they grapple to cope with increased demand.
Government officials have delayed scheduled changes to the Send system until next year after a policy document outlining those changes has been postponed.
Disadvantage and Financial Shortfalls
According to the latest deprivation measures (IMD) covering UK local authorities, several participating urban areas were among the most deprived in the country.
- “Participating urban centers like several major towns place in the most deprived 30 across the country under the latest IMD measures,” said the report.
“Although only one key city is in the top 10 for deprived neighbourhoods nationally, urban areas are much more prone to be in the most deprived fifth of England. The figures underscores the extent of challenges confronting local leaders across key cities in the coming year,” the report added.
“Council officials have been explicit about the necessity for a equitable and lasting financial structure that reflects and addresses the actual extent of disadvantage and demand,” said Michael Mordey.
“Without this, local authorities will continue to face difficult decisions around which vital provisions to allocate spend to, and which to cut, to the disadvantage of their communities.”
One in five of local authorities have reduced or weakened social care provision in the past 12 months, the study found.
