ASSET MANAGEMENT

Selling the family silver is a mistake

The Government is Incentivising councils to sell off publicly-owned assets, 'but these flexibilities should not become business as usual and they are not a sufficient substitute for a reform of our broken funding system', warns Rob Whiteman.

Grounded in a reluctance to provide direct funding, the Government is incentivising councils to dispose of publicly-owned buildings and assets.

But selling the family silver to fund ongoing revenue costs is a terrible way to fix financial distress.

While we welcome greater flexibility handed to councils, the directive to break the rules of accounting convention marks an appalling shift from stable funding.

At best, disposing of assets to fund revenue shortfalls defers the impact of cost pressures on the general fund. In some cases these flexibilities risk exacerbating costs regardless.

This is unsustainable because it generates one-off cash injections that come with the burden of liability and borrowing costs, not to mention the loss of a potentially productive asset for the local authority.

In this way, there is a risk local authorities are drawn into fire sales in efforts to plug budget shortfalls. This could drive poor value for money for communities.

The Chartered Institute of Public Finance and Accountancy (CIPFA) recommends flexibilities are limited to invest-to-save and uptake closely monitored. Independent reviews handled by a stakeholder panel including CIPFA and the Local Government Association could be an option.

Raising money in this way does not address longer-term pressures on finances and fails to target the underlying issue of how services are funded. The funding gap of £4bn, estimated over the next two years, can hardly be topped up by flexibilities on capital funding alone.

These flexibilities should not become business as usual and they are not a sufficient substitute for a reform of our broken funding system. The Government must set out what longer-term support will be provided. Only through such strategic and lasting measures can we safeguard the stability of our local government financing.

Rob Whiteman CBE is chief executive of CIPFA

X – @RobWhiteman

ASSET MANAGEMENT

Section 151 officers must be able to forecast with greater confidence

By Tracy Bingham | 19 June 2025

The sector knew not to expect full detail in the Spending Review but the absence of any further indication of funding distribution means continued uncertaint...

ASSET MANAGEMENT

Now is the time to step up

By Bruna Varante | 18 June 2025

Bruna Varante looks at the current state of the housing sector and outlines the importance of strong committed leadership to shape the future.

ASSET MANAGEMENT

Councils face enforcement capacity 'struggle'

By Martin Ford | 18 June 2025

A cornerstone of the Renter’s Rights Bill is under threat due to a lack of council capacity, the Local Government Association (LGA) has warned.

ASSET MANAGEMENT

Government handling of NICs increase 'unacceptable'

By Martin Ford | 17 June 2025

Ministers made a ‘major misstep’ in failing to assess the impact of the National Insurance Contribution (NIC) increase on councils, MPs have said.

Popular articles by Rob Whiteman CBE