Cash-strapped councils to sell centres and offices to fund services - see areas

01 March 2024 , 10:49

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Councils will likely look to sell things including development land, retail centres, industrial estates and offices (Image: Getty Images)

Almost 20 councils suffering financial worries have been given permission to sell off property and assets to pay for public services next year.

Local authorities are usually banned from selling assets to help with spending troubles but a crisis in funding means the Government is relaxing rules for 19 areas in England. Councils will likely look to sell things including development land, retail centres, industrial estates and offices. They have been warned not to sell off assets with a community benefit such as libraries and leisure centres.

The bailout agreements are set to raise over a billion pounds for councils. It comes after Nottingham City Council and Birmingham City Council both recently declared themselves effectively bankrupt as they struggle to keep afloat.

They issued Section 114 notices, which is a formal declaration they cannot balance its books. The notice means no new funding will be committed, putting local services at risk.

A fifth of councils in England think it is very or fairly likely they will need to issue the notice over the next year due to a lack of funding to keep key services running, according to a survey by the Local Government Association in December. Councils look after a range of public services including bin collection, social care and road safety.

Millions don't need to pay this 'priority' bill for the next two months

Ministers said they were taking a "pragmatic approach and agreeing financial flexibilities" to help cash-strapped councils. Local government experts welcomed the help but said "we should not mistake this for generosity on the part of the Government" as they called for "a sustainable long-term solution to local government funding".

Jonathan Carr-West, chief executive of the Local Government Information Unit (LGIU), said: We know how desperate these councils were to receive this exceptional support. For them, it is a last-minute reprieve that wards off immediate financial collapse. On that basis it is welcome news. But we should not mistake this for generosity on the part of the Government.

"They are simply allowing councils to borrow and to sell their own assets. We should not mistake today’s announcement for a sustainable long-term solution to local government funding. Increased debt and selling off the family silver will only get us so far.”

Mr Carr-West added that the LGIU's research suggests that asset sales were "at best offer a one-off cash injection [and] will not help councils with their long-term systemic funding issues". "The assets a council has to sell are unrelated to their funding needs, which are often driven by service pressures in social care, environmental and waste spending or homelessness," he said.

A Department for Levelling Up spokesman said: "This is about having a pragmatic approach and agreeing financial flexibilities with a small number of councils - as we have done in previous years - to help them balance their budgets and deliver vital services.

"Nearly three quarters of the support announced this year relates to six councils where there has been severe local failure, forcing the Government to step in and take action through statutory intervention. Councils are ultimately responsible for their finances and will see their overall funding for the upcoming financial year increase to £64.7 billion - a 7.5% increase in cash terms."