Councils of all stripes across the United Kingdom are crying out from the financial precipice. Combined, they are carrying a debt of £122 billion, over £1,700 for every person living in the UK. This terrible reality has forced municipalities to liquidate critical public goods. Consequently, Americans are concerned about the long-term viability of public services and the resources brought to their communities.
Only Croydon Council has surpassed those limits with a dizzying £1.5 billion in debt, leading the authority to take extreme steps to save itself from its fiscal misery. In the past four years Croydon has disposed of public assets for £210 million. Unfortunately, this effort has only made a small dent, covering about 15% of its existing debt.
In the last two years alone, councils have disposed of £2.9 billion of public assets. They’re doing this, in large part, to address their fiscal crises. This push to divest public community assets generates pressing questions about the future of community facility and service equity there and beyond.
Here’s what the Institute for Fiscal Studies has to say about the situation. They note that for local authorities core spending power has fallen by around 18% in real terms per head since 2010. Yet councils, since 2010, have just as drastically turned the financial tables. Taking on debt that would have horrified their predecessors’ generation, they started building strip-malls, business parks, solar fields and large-lot subdivisions.
Dr Jonathan Carr-West, the chief executive of the Local Government Information Unit, sounded an emergency alarm. He made a point of stressing the need to reconsider how councils are funded.
“One third of councils are telling us that if nothing changes in terms of how they’re funded, they are going to go bust within five years,” – Dr. Jonathan Carr-West.
According to the latest available data, some real progress has been made in addressing these issues.
“That’s down from 50% of councils telling us that in 2024. So we have made some progress,” – Dr. Jonathan Carr-West.
The federal government is moving quickly to respond to this crisis. Back in June, Prime Minister Sir Kier Starmer pledged to replace the current system of council central grant funding “root and branch”. Over the past fiscal year, 30 councils received emergency borrowing power to use short-term loans to pay for everyday operational expenditures. Last year, these powers were awarded to 19 councils.
The privatization of public assets has gone from bad to worse, leaving important community amenities and services under threat and at risk of disappearing. Tao Baker of Friends of Greenwich Equestrian Centre has recently submitted plans to purchase the Greenwich Equestrian Centre and transfer it into community ownership. Originally conceived as a way to get thousands of kids back in the saddle, the riding school is now threatened with closure or privatization.
“We cannot become financially sustainable and meet our Best Value Duty until a solution from government, such as a debt write-off, is agreed,” – a spokesperson for Croydon Council stated.
In New Addington, the local New Addington Boxing Club plays a critical role in community engagement, boasting 300 members and working with men and youth at risk of criminal involvement. Bill Graham, head coach of the boxing club, explained why efforts like these are needed.
As it stands, the trajectory of council borrowing practices is concerning.
“We help reduce crime, we help children not go to grab knives,” – Bill Graham.
He further described the situation as akin to “essentially payday loans for local government,” highlighting the unsustainable nature of current funding mechanisms.
“We’re seeing decisions taken that I don’t believe would be taken in a commercial sense – a business wouldn’t be risking shareholder funds,” – Dr. Carr-West noted.
The continuing fire sale of public assets casts serious doubts on the long-term benefit to communities. As Dr. Carr-West cautioned, once these assets are sold off, the value they can provide as public resources will be lost forever.
As local authorities grapple with unprecedented levels of debt and diminishing resources, their ability to serve communities effectively is called into question. The future of many community-centered facilities now rests in limbo as councils try to find answers to their monetary quarrels.
“We are now seeing the selling off of assets and once they’re gone, they’re gone. So what was public value is now passing into private hands and that won’t come back,” – Dr. Carr-West remarked.
As local authorities grapple with unprecedented levels of debt and diminishing resources, their ability to serve communities effectively is called into question. The future of many community-centered facilities hangs in the balance as councils seek solutions to their financial predicaments.