Based on a recent study of municipal councils, English councils are planning to sell community centers, sports centres, and shopping arcades as they rely on a fire sale of assets to stabilize finances.
Increasing Fiscal Challenges Drive Asset Sales
The Key Cities Group for second-tier cities in England reported that six out of ten of local authorities are planning to dispose of properties to meet the rising costs of social services for vulnerable individuals.
Local governments have previously come under fire for selling public land and land to shore up their finances, but they contend they must continue to generate essential revenue from property disposals or face insolvency.
This coalition noted that a high proportion of authorities attempting to raise money from a fire sale of holdings marked “a distinct shift from 2024, when the largest share (60%) of local leaders said they would prioritise service redesigns and utilising financial reserves to weather growing financial challenges.”
Detailed Examples of Planned Disposals
Medway Council in Kent announced its property management strategy included the sale of a shopping centre in a local town and a community venue in another town to raise 20 million pounds over five years.
- A local golf course and business parks held in two English counties, which all generate rent for Medway council, will also be sold under the strategy.
Local Levy Increases and Wider Financial Strains
This research of councils in the coalition, which covers several urban centers, further found that over seven in ten of authorities will need to raise council taxes next April to address the rising cost of essential services, increased rates of homelessness, and a persistent housing shortage.
The authority explained it will proceed with property disposals after sharp increases in the cost of youth support, special educational needs and disability (Send) provision, elderly and disability services, and temporary accommodation.
“We are taking innovative approaches but some of these take time to achieve both improved services and financial savings,” said Vince Maple.
He added: “We face demographic pressures which will persist to add to the pressures we have. As a unitary authority, we had a drastic reduction in our revenue support grant from over the past decade, which is extremely difficult.”
Countrywide Trends and Forecasts
Research of regional authorities recently further found council budgets being stretched by the increasing figures of children and adults requiring Send support.
The County Councils Network projected that council deficits will reach 4.4 billion pounds a year by the end of the decade, as they struggle to cope with rising needs.
Government officials have delayed scheduled changes to the Send system until next year after a policy document outlining those changes has been postponed.
Disadvantage and Funding Gaps
Based on the latest indices of deprivation (the Index of Multiple Deprivation) for English councils, several key cities members were among the most deprived in the country.
- “Member cities like Hull, Bradford, Stoke-on-Trent, Sunderland and Wolverhampton place in the most deprived 30 nationally under the latest deprivation indices,” noted 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 most deprived fifth of the nation. The figures highlights the extent of challenges confronting municipal officials across major urban centers in the coming year,” the report concluded.
“Council officials have been explicit about the need for a fair and sustainable financial structure that reflects and responds to the real levels of disadvantage and need,” stated Michael Mordey.
“Without this, councils will persist to face impossible choices around which essential services to fund, and which to reduce, to the disadvantage of their residents.”
One in five of councils have cut or compromised care services in the past 12 months, the study found.