According to a recent survey of local authorities, English councils are planning to offload community centers, athletic facilities, and shopping arcades as they rely on a fire sale of assets to stabilize finances.
Growing Financial Challenges Prompt Asset Sales
A coalition of councils for major urban areas in the UK stated that six out of ten of local authorities are intending to sell assets to cover the escalating costs of adult and children’s social care.
Councils have previously come under fire for selling public land and land to shore up their budgets, but they contend they must continue to generate essential revenue from property disposals or declare themselves bankrupt.
The group said that a significant number of authorities seeking to raise money from a quick sale of assets marked “a distinct shift from 2024, when the largest share (60%) of local leaders stated they would prioritise restructuring services and using financial reserves to weather growing financial challenges.”
Specific Examples of Planned Sales
One local authority in Kent announced its asset disposal plan included the disposal of a retail complex in Rainham and a community venue in another town to raise £20m over the next half-decade.
- A local golf course and commercial properties owned in Worcestershire and Suffolk, which all provide rental income for Medway council, will also be disposed of under the strategy.
Local Levy Increases and Wider Fiscal Pressures
This research of local authorities in the coalition, which covers Sunderland, Southampton, Gloucester and Salford, also found that more than 70% of authorities will need to increase local levies next spring to address the rising cost of core provisions, higher levels of homelessness, and a longstanding accommodation deficit.
Medway council explained it will proceed with asset sales after sharp increases in the cost of children services, special educational needs and disability (Send) provision, adult social care, and short-term housing.
“We are adopting creative strategies but some of these require time to deliver both improved services and cost efficiency,” stated a council leader.
He continued: “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 central funding from over the past decade, which is extremely difficult.”
National Patterns and Forecasts
Research of regional authorities this week also found local finances being strained by the increasing figures of young people and adults needing special educational assistance.
A network of councils said that council deficits will reach £4.4bn a year by 2029, as they struggle to cope with rising needs.
Ministers have put off planned reforms to the Send system until the coming year after a policy document setting out those changes has been postponed.
Disadvantage and Funding Shortfalls
Based on the most recent deprivation measures (the Index of Multiple Deprivation) covering English councils, several key cities members were among the most disadvantaged in England.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the most deprived 30 nationally under the latest IMD measures,” noted the report.
“Although only one key city is in the ten most deprived for deprived neighbourhoods countrywide, cities are far more likely to be in the worst-off 20% of England. The data highlights the scale of difficulties facing local leaders across key cities in the coming year,” the report concluded.
“Council officials have been clear about the need for a equitable and lasting financial structure that reflects and addresses the actual extent of deprivation and demand,” stated a council leader.
“Lacking this, local authorities will continue to face impossible choices around which vital provisions to fund, and which to cut, to the disadvantage of their communities.”
A fifth of councils have cut or compromised social care provision in the last year, the survey found.
