Based on a recent study of local authorities, English councils are planning to offload community centers, athletic facilities, and shopping arcades as they rely on a fire sale of properties to stabilize finances.
Increasing Financial Challenges Prompt Asset Sales
The Key Cities Group representing major urban areas in England reported that 60% of councils are intending 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 open spaces to support their budgets, but they argue they must continue to raise vital cash from property disposals or declare themselves bankrupt.
The group said that a high proportion of councils attempting to raise money from a quick sale of holdings represented “a distinct shift from 2024, when the largest share (six in ten) of municipal officials stated they would prioritise service redesigns and using savings to weather growing financial challenges.”
Specific Cases of Planned Sales
One local authority in Kent said its asset disposal plan featured the disposal of a shopping centre in Rainham and a social club in another town to raise £20m over five years.
- Gillingham golf club and business parks owned in two English counties, which all provide rental income for the authority, will also be disposed of under the strategy.
Local Levy Rises and Wider Financial Strains
The survey of councils in the coalition, which includes Sunderland, Southampton, Gloucester and Salford, also found that over seven in ten of authorities will need to increase local levies next spring to cover the rising cost of essential services, higher levels of homelessness, and a longstanding accommodation deficit.
Medway council said it will proceed 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 innovative approaches but some of these require time to deliver both improved services and cost efficiency,” said Vince Maple.
He continued: “There are demographic pressures which will persist to add to the pressures we have. As a local government body, we had a drastic reduction in our revenue support grant from over the past decade, which is extremely difficult.”
Countrywide Trends and Projections
A survey of regional authorities this week further found council budgets being strained by the growing number of children and adults requiring special educational assistance.
The County Councils Network projected that council deficits will reach £4.4bn a year by 2029, as they struggle to cope with increased demand.
Ministers have delayed planned reforms to the special educational needs framework until next year after a white paper outlining those changes was recently delayed.
Deprivation and Financial Shortfalls
Based on the most recent indices of deprivation (IMD) for English councils, many key cities members were among the most deprived 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 a single urban area is among the ten most deprived for deprived neighbourhoods nationally, urban areas are far more likely to be in the most deprived fifth of the nation. The figures highlights the extent of challenges facing local leaders across major urban centers in the coming year,” the report added.
“Local government leaders have been clear about the need for a fair and sustainable 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 fund, and which to reduce, to the disadvantage of their communities.”
A fifth of local authorities have cut or compromised social care provision in the past 12 months, the study revealed.
