‘It’s one of the toughest we’ve ever had to set’: All you need to know about council budget as tax and rent hiked - and cuts announced

Reporter: Charlotte Hall, Local Democracy Reporter
Date published: 12 February 2024

Oldham council bosses came together to discuss the future of the borough’s finances as its budget was described as ‘one of the toughest ever to set’.

At a full cabinet meeting last night (Monday), councillors decided to raise council tax, service fees and rent to help fund increased spending on social care, children’s services and housing.

Every local authority has to balance their books ahead of the new tax year in April, but growing numbers are struggling to make ends meet in the face of soaring demand for services. 

Council leader Arooj Shah said: “I don’t think I’m overstating the case when I say this has been one of the toughest budgets that this council has ever had to set.

"With a gap of £30m to close and after 12 years of cuts, there were no easy answers and there’s definitely no fat left to trim. 

“Every year we’re seeing more children in need of support from social services, more elderly people needing care to keep them safe and well, more people who don’t have a stable home to live in because of the national housing crisis. 

“We’ve tried to do our utmost to prioritise those groups of people who are most in need - those for whom our council services are literally a case of life or death.” 

But if spending on vital services is set to increase, so too must Oldham’s budget.

April 2024 will see council tax in the area rising by five per cent - with 2.99pc ring fenced for adult and social care.

That means those in council tax band D will pay an additional £110 a year. 

Social housing rents will also go up by 7.7pc - a figure the council claims is following government advice to raise prices in line with inflation in September 2023 (6.7pc) plus one per cent.

The decision will see their tenants paying an extra £7.50 each week, though the councillors clarified this would be covered by housing benefits in most cases. 

Fees and charges for services like parking, planning proposals and licensing will also go up by an average of 8.8pc. 

On top of this, the cabinet has approved all 34 budget proposals from the Labour council, cutting £16m from council spending.

They rejected all the proposals put forward by opposition councillors. 

The approved suggestions include £3.3m cuts on schemes for children and young people and £2.8m on health and social care, and will result in £97.3 posts cut from the council service. 

Coun Shah said: “I personally resent all savings we need to make - but we will make them because we have no choice.” 

Even with the cuts, council bosses still need to plug a £9.7m gap in the budget, which they plan to do by dipping into the council’s reserves. 

Reserves are usually considered ‘rainy day funds’ for councils - money that can be used in emergency situations or for future-proofing projects.

But growing numbers of councils are being forced to draw on reserves - putting them at risk of a Section 114 - a state of bankruptcy. 

Oldham council has assured the public they are not on that cliff edge just yet.

But Coun Jabbar, the council’s finance lead, cautioned the council that it was ‘not sustainable’ to keep drawing on reserves in the long-term. 

Finally, the council also discussed its capital spending plan.

This is a separate pot of money funded by borrowing and capital grants. It’s independent from incomes like council tax. 

Coun Jabbar declared they would be spending almost £100m in 2024/25, largely on regeneration, schools, transport and infrastructure projects.

These include the council’s move to the new Spindle’s offices, the Oldham town centre regeneration projects, investment in children’s services and updating IT.

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