According to a recent study of municipal councils, English councils are preparing to sell social clubs, athletic facilities, and retail spaces as they bet on a fire sale of properties to stabilize finances.
Increasing Financial Pressures Drive Asset Sales
The Key Cities Group representing second-tier cities in the UK stated that 60% of councils are planning to sell assets to cover the escalating costs of social services for vulnerable individuals.
Councils have in the past come under fire for disposing of playing fields and land to shore up their budgets, but they contend they must proceed to generate essential revenue from property disposals or declare themselves bankrupt.
The group said that a significant number of authorities seeking to generate funds from a fire sale of holdings represented “a distinct shift from 2024, when the largest share (60%) of municipal officials stated they would prioritise restructuring services and using savings to manage increasing fiscal pressures.”
Specific Examples of Proposed Disposals
One local authority in Kent said its property management strategy featured the sale of a retail complex in a local town and a social club in Rochester to raise 20 million pounds over five years.
- A local golf course and business parks held in Worcestershire and Suffolk, which all provide rental income for Medway council, will additionally be sold under the strategy.
Council Tax Increases and Broader Financial Strains
The survey of local authorities in the key cities group, which includes Sunderland, Southampton, Gloucester and Salford, also found that over seven in ten of authorities will need to increase council taxes next spring to cover the growing cost of core provisions, increased rates of homelessness, and a longstanding housing shortage.
Medway council said it will proceed with property disposals after steep rises in the cost of youth support, support for vulnerable learners, elderly and disability services, and temporary accommodation.
“We are adopting innovative approaches but some of these require time to deliver both better provisions and financial savings,” said a council leader.
He continued: “We face population challenges which will persist to add to 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 extremely difficult.”
National Trends and Forecasts
Research of regional authorities recently further found local finances being strained by the growing number of young people and adults needing Send support.
The County Councils Network projected that local shortfalls will hit £4.4bn a year by the end of the decade, as they grapple to manage rising needs.
Ministers have delayed planned reforms to the Send system until the coming year after a policy document setting out those reforms has been postponed.
Disadvantage and Financial Shortfalls
Based on the most recent indices of deprivation (the Index of Multiple Deprivation) for English councils, many key cities members were among the most deprived in the country.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the top 30 across the country under the latest IMD measures,” noted the report.
“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 the nation. The data highlights the extent of difficulties confronting local leaders across key cities in the next twelve months,” the report added.
“Local government leaders have been clear about the necessity for a fair and sustainable funding system that accounts for and responds to the real levels of disadvantage and demand,” said a council leader.
“Lacking this, councils will continue to face difficult decisions around which vital provisions to fund, and which to reduce, to the detriment of their residents.”
One in five of councils have reduced or weakened care services in the last year, the study found.
