Council staff asked to consider voluntary redundancy following news of 'massive' predicted £25m overspend

Oldham Council has asked staff to consider voluntary redundancies to help plug a predicted £36m hole in the budget. 

The move is in response to the council’s spending, which chiefs insist has ‘increased massively’ this year due to pressures in adult and children’s social care and temporary accommodation.

It is understood that staff have received emails this week with details of voluntary redundancy terms.

The council is predicting a £25m overspend this year – on top of an existing £11m budget gap from last year. 

The £25m figure is based on ‘projections’ which take the current rate of spending and multiplies over the course of the year.

A council spokesperson noted that the council is already working on reducing spending, meaning they hope to reduce this figure. 

Council boss Arooj Shah told the LDRS: “We’re hopeful for a new settlement but we’ve got to be realistic.

"We’ve got a job to do.

“We’re going to have to go out this week and have conversations with our staff and speak to people who might want to go through the voluntary redundancy scheme or who might want to take a career break.

"We’re looking at all options and speaking to unions in a collaborative way.

“Our focus is on protecting the services that matter and we will be considering our ability to continue doing that when making decisions about voluntary redundancies.” 

The council boss said the local authority was under ‘increased pressure that is not unique to Oldham’ as demand for social care and temporary housing continue to spiral in the cost of living crisis.

The council has also been hit by rising prices of children’s home placements and care for the elderly, which are largely contracted out to private firms. 

Growing numbers of people in need of emergency housing as a result of homelessness has also resulted in significant spending on hotels and temporary accomodation. 

But Coun Shah says pressures have hit Oldham council particularly hard because of the ‘unfair’ funding system, which leaves councils reliant on council tax increases. 

Because of high levels of unemployment and social need in Oldham and a higher proportion of residents living in houses with lower council tax bands, the borough struggles to raise its level of income.

Meanwhile, local deprivation results in a greater need for council services. 

Coun Shah said: “If you’re a resident and you’re angry that you pay the highest council tax, you’re justified.

"The way the taxes work mean the poorest pay the most [comparative to their income] but compared to other areas in the country and Greater Manchester, we don’t have the level of income others do.” 

She noted that previous secretary of states had advised councils to dip into their ‘rainy day funds’ – financial reserves – to balance the books. 

“But it’s not just rained in Oldham,” Shah said.

“It’s poured, it’s stormed, it’s hailed. Which has meant that we’ve got no money.

"We’ve spent the last 18 months looking at our budget situation.

"But the reality is, the money’s not in the system so we are going to have to make some really difficult decisions.”  

The local authority is not looking at a Section 114 – the term for when councils go ‘bankrupt’ and are forced to cut all extra spending – and still has around £50m in reserves, according to council sources.

But they will need to continue making significant cuts – or gain a substantial funding package – to plug the funding gap. 

The council is just one of many across the country that is struggling to stay in the green.

Many are awaiting the funding decisions of the new Labour government, with details of the Spending Review and Local Government Finance Settlement due to be announced later this year.

Asked if the council was in need of a government bail out, coun Shah answered: “Bail out is the wrong term.

"We’re asking for fairer funding. 

“If you had fairer funding, it would mean that when the demand increased, so would your financial support.

"Because ultimately, it’s the needs of the residents – you can’t ever turn people away.”

She later added: “I resent the term bailout. It’s not a bailout.

"We’ve been responsible. We’ve been doing our best for people through really, really difficult times. 

“People in Oldham are living really grim lives.

"You’ve seen that hope go out of their eyes and real despair take its place.

"We couldn’t have had a new government at a better time.

"And now we’re working towards rebuilding that hope and aspiration inside them.”  

Other council sources added that the council was ‘lobbying like crazy’ to get a fair deal from the new government, while ‘doing everything they can to mitigate the overspend’. 

A spokesperson from the Department for Levelling Up, Housing and Communities, who determine local authority funding, said: “This government is committed to fixing the foundations of local government and we will work closely with local government to do so.

“To get councils back on their feet, we will work closely with them to provide more stability through multi-year funding settlements, ending competitive bidding for pots of money and reforming the local audit system.”

---

Do you have a story for us? Want to tell us about something going on in and around Oldham? Let us know by emailing news@oldham-chronicle.co.uk , calling our Oldham-based newsroom on 0161 633 2121 , tweeting us @oldhamchronicle or messaging us through our Facebook page. All contact will be treated in confidence.