According to a recent study of municipal councils, English councils are preparing to sell community centers, athletic facilities, and shopping arcades as they bet on a fire sale of assets to balance the books.
Growing Fiscal Challenges Drive Asset Sales
The Key Cities Group for major urban areas in the UK reported that 60% of councils are intending to sell assets to meet the rising costs of social services for vulnerable individuals.
Local governments have previously faced criticism for selling public land and open spaces to support their budgets, but they argue they must proceed to generate essential revenue from asset sales or declare themselves bankrupt.
The group noted that a significant number of authorities seeking to raise money from a fire sale of assets represented “a clear change from 2024, when the majority (60%) of municipal officials said they would focus on service redesigns and using financial reserves to manage increasing financial challenges.”
Specific Examples of Planned Sales
One local authority in southeast England announced its asset disposal plan featured the disposal of a retail complex in a local town and a community venue in Rochester to generate £20m over five years.
- Gillingham golf club and commercial properties owned in two English counties, which all provide rental income for the authority, will also be disposed of under the plan.
Local Levy Rises and Broader Fiscal Pressures
This research of councils in the key cities group, which includes several urban centers, further found that over seven in ten of authorities will need to raise council taxes next spring to address the growing cost of core provisions, increased rates of homelessness, and a longstanding accommodation deficit.
Medway council explained it will proceed with asset sales after sharp increases in the cost of youth support, special educational needs and disability (Send) provision, elderly and disability services, and short-term housing.
“We are adopting innovative approaches but some of these take time to deliver both better provisions and cost efficiency,” said Vince Maple.
He continued: “There are demographic pressures which will continue to increase the strains we have. As a unitary authority, we had a 91% cut in our revenue support grant from over the past decade, which is very challenging.”
Countrywide Trends and Forecasts
A survey of regional authorities recently further found local finances being strained by the growing number of children and adults requiring special educational assistance.
A network of councils said that council deficits will reach 4.4 billion pounds a year by the end of the decade, as they grapple to manage increased demand.
Government officials have delayed planned reforms to the Send system until next year after a policy document outlining those changes was recently delayed.
Disadvantage and Funding Gaps
Based on the most recent deprivation measures (the Index of Multiple Deprivation) covering UK local authorities, many key cities members were included in the most deprived in England.
- “Member cities like several major towns rank in the most deprived 30 nationally under the latest deprivation indices,” said the study.
“Although only one key city is in the top 10 for disadvantaged communities nationally, cities are much more prone to be in the worst-off 20% of the nation. The figures highlights the scale of challenges confronting municipal officials across key cities in the next twelve months,” the analysis added.
“Local government leaders have been clear about the need for a fair and sustainable funding system that accounts for and responds to the actual extent of deprivation and demand,” stated a council leader.
“Lacking this, local authorities will continue to face impossible choices around which essential services to allocate spend to, and which to cut, to the detriment of their residents.”
One in five of councils have cut or compromised care services in the last year, the survey found.
