According to a new study of local authorities, English councils are planning to sell social clubs, athletic facilities, and retail spaces as they bet on a rapid disposal of properties to balance the books.
Growing Financial Challenges Drive Asset Sales
A coalition of councils representing major urban areas in England reported that six out of ten of councils are intending to sell assets to meet the rising costs of social services for vulnerable individuals.
Local governments have in the past come under fire for disposing of public land and land to support their finances, but they contend they must continue to raise vital cash from property disposals or declare themselves bankrupt.
This coalition noted that a significant number of authorities seeking to generate funds from a fire sale of holdings marked “a distinct shift from 2024, when the majority (60%) of municipal officials said they would focus on restructuring services and utilising financial reserves to manage growing fiscal pressures.”
Specific Examples of Proposed Disposals
One local authority in southeast England said its asset disposal plan included the disposal of a retail complex in Rainham and a social club in another town to generate £20m over the next half-decade.
- Gillingham golf club and business parks owned in Worcestershire and Suffolk, which all generate rent for Medway council, will additionally be disposed of under the strategy.
Local Levy Increases and Broader Financial Pressures
The survey of local authorities in the key cities group, which covers several urban centers, also found that over seven in ten of councils will have to raise local levies next spring to cover the growing cost of essential services, increased rates of homelessness, and a longstanding housing shortage.
The authority explained it will press ahead with property disposals after steep rises in the cost of children services, special educational needs and disability (Send) provision, elderly and disability services, and short-term housing.
“We are taking innovative approaches but certain measures take time to achieve both better provisions and cost efficiency,” stated a council leader.
He continued: “We face population challenges which will persist 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 extremely difficult.”
National Trends and Forecasts
Research of regional authorities recently further found council budgets being stretched by the increasing figures of children and older individuals requiring Send support.
A network of councils said that local shortfalls will hit £4.4bn a year by the end of the decade, as they grapple to manage increased demand.
Ministers have put off planned reforms to the Send system until next year after a white paper outlining those reforms was recently delayed.
Deprivation and Funding Shortfalls
According to the most recent deprivation measures (the Index of Multiple Deprivation) for English councils, many key cities members were among the most deprived in the country.
- “Member cities like several major towns place in the most deprived 30 across the country under the latest IMD measures,” noted the study.
“Although only one key city is among the top 10 for disadvantaged communities nationally, urban areas are much more prone to be in the worst-off 20% of England. The data underscores the extent of challenges confronting municipal officials across key cities in the coming year,” the report added.
“Local government leaders have been explicit about the need for a equitable and lasting financial structure that reflects and responds to the actual extent of deprivation and need,” said a council leader.
“Lacking this, councils will continue to face difficult decisions around which vital provisions to fund, and which to cut, to the detriment of their communities.”
A fifth of local authorities have reduced or weakened care services in the past 12 months, the study revealed.
