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Based on a latest survey of municipal councils, UK 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 Pressures Prompt Asset Sales

The Key Cities Group for second-tier cities in the UK stated that six out of ten of local authorities are intending to dispose of properties to cover the rising costs of social services for vulnerable individuals.

Local governments have in the past come under fire for selling public land and land to support their budgets, but they argue they must proceed to generate essential revenue from property disposals or face insolvency.

The group noted that a significant number of authorities attempting to generate funds from a quick sale of holdings represented “a distinct shift from 2024, when the majority (six in ten) of municipal officials stated they would focus on service redesigns and using savings to weather growing financial challenges.”

Detailed Examples of Proposed Disposals

One local authority in southeast England said its property management strategy featured the sale of a shopping centre in Rainham and a social club in another town to raise 20 million pounds over five years.

• Gillingham golf club and business parks owned in two English counties, which all generate rent for the authority, will also be disposed of under the strategy.

Council Tax Increases and Broader Fiscal Strains

This research of local authorities in the coalition, which covers Sunderland, Southampton, Gloucester and Salford, also found that more than 70% of councils will have to increase council taxes next spring to cover the rising cost of essential services, increased rates of housing insecurity, and a longstanding housing shortage.

Medway council said it will press ahead with asset sales after sharp increases in the cost of children services, support for vulnerable learners, adult social care, and temporary accommodation.

“We are adopting creative strategies but some of these require time to deliver both improved services and cost efficiency,” stated Vince Maple.

He continued: “There are population challenges which will continue to increase the pressures 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 county councils recently further found council budgets being stretched by the increasing figures of children and adults needing special educational assistance.

The County Councils Network projected that local shortfalls will hit £4.4bn a year by 2029, as they struggle to cope with increased demand.

Ministers have delayed scheduled changes to the special educational needs framework until next year after a white paper setting out those changes has been postponed.

Disadvantage and Financial Gaps

According to the latest indices of deprivation (IMD) for UK local authorities, many key cities members were among the most deprived in England.

• “Member cities like several major towns place in the most deprived 30 nationally under the latest deprivation indices,” said the study.

“Although only one key city is in the top 10 for deprived neighbourhoods countrywide, urban areas are much more prone to be in the most deprived fifth of the nation. The data highlights the extent of difficulties facing local leaders across major urban centers in the next twelve months,” the report concluded.

“Local government leaders have been clear about the need for a fair and sustainable financial structure that reflects and addresses the actual extent of disadvantage and need,” said a council leader.

“Without this, local authorities will persist to face difficult decisions around which essential services to allocate spend to, and which to cut, to the detriment of their communities.”

A fifth of councils have cut or compromised social care provision in the past 12 months, the survey found.