The Local Government Association (LGA) is relying on property and commercial income to get it out of budget problems by 2020-21.
A paper accepted yesterday by its leadership board said the LGA faced pressures that included a lower government grant, pension deficits and increased costs, including from last year’s pay settlement.
It said subscription rates could not easily be raised due to “the need to keep councils in membership”.
The LG Group - the LGA and its associated organisations - had liabilities exceeding assets by more than £45m at 31 March 2018, though this was an improvement on the £71m registered a year earlier.
“Despite the challenging environment described above, the outlook for the medium term remains reasonably positive,” the report said.
It said the LGA would use reserves to run a deficit next year but from 2020-21 onwards, “we expect to be able to budget a net income position (creating a ‘surplus’) for the group overall, with the income generated by the property and commercial companies more than offsetting the ongoing difficult conditions facing the operating companies”.
These companies own the LGA’s Westminster headquarters and the Improvement & Development Agency’s (IDeA) former home at Layden House in Farringdon.
One floor of the headquarters has been let to the National Farmers Union and the LGA hopes to rent out a further two floors that it no longer needs.
Layden House is expected to be refurbished and lettable by December.