Schools, care homes and sports clubs sold off to pay spiralling council debt

Communities across the UK are losing publicly owned buildings — from leisure centres and nurseries to an Olympic equestrian venue — as cash-strapped councils attempt to tackle spiraling debts now totalling £122 billion.

A BBC investigation found that hundreds of assets are being sold off, often at knock-down prices, to plug holes in council budgets. Debt has risen by 7% in the past year alone, equivalent to around £1,700 per household.

Dr. Jonathan Carr-West, Chief Executive of the Local Government Information Unit, warned:

“What was once public value is now in private hands, and it will not return. Until there’s a long-term solution to council debt, the sell-off will continue.”

“Payday loans for local government”

Councils have historically borrowed money to build schools, housing, and infrastructure, often through the government’s Public Works Loan Board (PWLB). But since 2010, many authorities also invested in shopping centres, offices, and solar farms — strategies that backfired when interest rates spiked after 2022.

Restrictions on speculative borrowing were introduced in 2021, yet the Public Accounts Committee has already warned that council debt levels are “unsustainable.”

One local government finance officer described the situation starkly:

“It’s essentially payday loans for local government.”

In the past year alone, 30 councils were given special permission to sell assets to cover day-to-day services such as bin collections and social care — up from 19 the year before.

Croydon: debt repayments swallowing services

Croydon Council in south London is among the hardest hit. After heavy investments in a housing company, shopping centre, and hotel collapsed during Covid, the council was left with £1.5 billion of debt.

Despite selling off £210 million worth of public property in four years, Croydon spends £70 million annually just servicing debt interest. Leisure centres, nurseries, and community halls have been shuttered.

At New Addington Leisure and Community Centre, home to a thriving boxing club, closure left hundreds of young people without facilities.

“We keep 300 kids off the streets and away from crime,” said head coach Bill Graham. “But in the end, everything came down to finance. Once the bank said sell, that was it.”

Olympic legacy lost

In Greenwich, the £1.6 million Olympic Equestrian Centre, opened in 2013 by Princess Anne and once boasting an 18-month waiting list for free riding lessons, was sold off last November despite a 4,500-signature petition.

Local businesswoman Tao Baker, who proposed community ownership, called the sale short-sighted:

“This won’t even scratch the debt pile, but the loss will be felt for generations.”

Greenwich Council, facing debts up £268 million last year, said its priority was building affordable housing for the 26,000 residents on its waiting list.

Debt isn’t always bad — but risk is rising

Some councils argue that borrowing can still pay off. Warrington Council’s £1.6 billion debt is partly offset by £20–23 million annual returns from investments in property and logistics centres.

But inspectors warn the council is heavily exposed to rising interest rates and has already suffered a £9 million loss from the collapse of Together Energy in 2022.

Sarah Calkin, editor of the Local Government Chronicle, noted:

“Debt isn’t inherently bad. It depends what it’s for. The problem is councils borrowed when rates were low — and were caught out when the tide turned.”

Calls for government action

With a third of councils warning they could go bankrupt within five years, pressure is mounting on central government to step in. Some local leaders are calling for a national debt write-off.

Croydon Council said bluntly:

“We can’t become financially healthy until government provides a solution.”

Prime Minister Sir Keir Starmer acknowledged the funding system is “broken” and in June announced a new formula aimed at redistributing grants to disadvantaged areas. Labour has also pledged to streamline two-tier councils into single “unitary” authorities to reduce bureaucracy.

“We’ve put £69 billion into local services this year and will go further to rewrite the funding structure so councils can continue to provide the services communities rely on,” a government spokesperson said.

For Dr. Carr-West, reforms can’t come soon enough: