According to a latest survey of municipal councils, English councils are preparing to sell social clubs, athletic facilities, and shopping arcades as they rely on a fire sale of assets to balance the books.
Growing Financial Challenges Drive Asset Sales
The Key Cities Group for second-tier cities in England stated that 60% of local authorities are planning to sell assets to cover the rising costs of adult and children’s social care.
Councils have in the past faced criticism for selling public land and open spaces to support their budgets, but they contend they must proceed to generate essential revenue from asset sales or declare themselves bankrupt.
This coalition noted that a high proportion of councils seeking to raise money from a fire sale of assets represented “a distinct shift from 2024, when the largest share (60%) of municipal officials said they would prioritise restructuring services and using financial reserves to weather growing financial challenges.”
Detailed Cases of Planned Sales
Medway Council in southeast England announced its asset disposal plan featured the sale of a retail complex in a local town and a community venue in another town to raise £20m over the next half-decade.
- A local golf course and commercial properties held in two English counties, which all provide rental income for Medway council, will also be disposed of under the plan.
Local Levy Increases and Wider Financial Pressures
This research of local authorities in the coalition, which covers Sunderland, Southampton, Gloucester and Salford, further found that over seven in ten of councils will need to raise council taxes next spring to cover the growing cost of essential services, increased rates of housing insecurity, and a persistent accommodation deficit.
The authority said it will proceed with asset sales after sharp increases in the cost of youth support, support for vulnerable learners, adult social care, and short-term housing.
“We are adopting innovative approaches but certain measures require time to achieve both better provisions and cost efficiency,” said a council leader.
He added: “There are demographic pressures which will persist to increase the strains we have. As a unitary authority, we had a 91% cut in our revenue support grant from 2010-24, which is very challenging.”
National Trends and Forecasts
A survey of regional authorities this week further found local finances being stretched by the increasing figures of children and adults needing special educational assistance.
The County Councils Network projected that local shortfalls will reach £4.4bn a year by 2029, as they grapple to cope with rising needs.
Ministers have put off scheduled changes to the special educational needs framework until the coming year after a white paper setting out those changes has been postponed.
Deprivation and Funding Shortfalls
Based on the most recent indices of deprivation (the Index of Multiple Deprivation) for English councils, several key cities members were among the most disadvantaged in England.
- “Participating urban centers like several major towns place in the top 30 nationally under the latest IMD measures,” said the study.
“Although only one key city is in the ten most deprived for deprived neighbourhoods countrywide, urban areas are far more likely to be in the worst-off 20% of England. The data underscores the extent of challenges facing local leaders across major urban centers in the coming year,” the report concluded.
“Council officials have been explicit about the necessity for a fair and sustainable funding system that accounts for and responds to the actual extent of disadvantage and demand,” stated Michael Mordey.
“Without this, local authorities will persist to face impossible choices around which essential services to fund, and which to cut, to the detriment of their communities.”
A fifth of councils have reduced or weakened care services in the last year, the survey revealed.
