According to a new study of municipal councils, UK councils are planning to sell community centers, sports centres, and shopping arcades as they bet on a fire sale of properties to balance the books.
Increasing Fiscal Challenges Drive Asset Sales
The Key Cities Group for second-tier cities in the UK reported that 60% of councils 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 disposing of playing fields and open spaces to shore up their budgets, but they contend they must continue to generate essential revenue from property disposals or declare themselves bankrupt.
The group noted that a high proportion of authorities seeking to raise money from a quick sale of holdings represented “a clear change from 2024, when the largest share (six in ten) of local leaders stated they would prioritise service redesigns and utilising financial reserves to weather growing fiscal pressures.”
Detailed Examples of Proposed Disposals
Medway Council in southeast England announced its asset disposal plan featured the disposal of a shopping centre in a local town and a social club in another town to generate £20m over five years.
- A local golf course and commercial properties held in two English counties, which all provide rental income for the authority, will also be sold under the strategy.
Council Tax Increases and Wider Financial Pressures
This research of local authorities in the coalition, which includes Sunderland, Southampton, Gloucester and Salford, further found that more than 70% of authorities will have to increase local levies next April to address the rising cost of essential services, higher levels of housing insecurity, and a longstanding accommodation deficit.
Medway council explained it will press ahead with property disposals after sharp increases in the cost of children services, support for vulnerable learners, elderly and disability services, and temporary accommodation.
“We are taking creative strategies but some of these require time to achieve both improved services and financial savings,” stated Vince Maple.
He continued: “There are demographic pressures which will continue to increase the pressures we have. As a local government body, we had a drastic reduction in our central funding from over the past decade, which is very challenging.”
National Patterns and Forecasts
A survey of regional authorities this week also found council budgets being strained by the growing number of young people and adults requiring special educational assistance.
The County Councils Network projected that local shortfalls will hit £4.4bn a year by 2029, as they grapple to cope with increased demand.
Ministers have put off planned reforms to the special educational needs framework until next year after a policy document outlining those changes has been postponed.
Deprivation and Financial Gaps
According to the most recent deprivation measures (the Index of Multiple Deprivation) for English councils, several participating urban areas were among the most disadvantaged in England.
- “Member cities like several major towns rank in the top 30 across the country under the latest IMD measures,” said the report.
“While only one key city is among the top 10 for deprived neighbourhoods countrywide, urban areas are much more prone to be in the most deprived fifth of England. The figures underscores the extent of challenges confronting municipal officials across major urban centers in the coming year,” the report concluded.
“Council officials have been clear about the necessity for a equitable and lasting financial structure that reflects and addresses the actual extent of deprivation and demand,” stated Michael Mordey.
“Lacking this, councils will continue to face impossible choices around which essential services to allocate spend to, and which to cut, to the disadvantage of their communities.”
A fifth of local authorities have reduced or weakened social care provision in the last year, the study found.
