Oldham faces crushing £20m budget blackhole

Oldham councillors called for the government to ‘be kind’ to local authorities ahead of a long-awaited settlement announcement tomorrow (Wednesday). 

The plea came as Oldham bosses met to discuss the borough’s finances on yesterday (Monday).

The council is still facing a predicted overspend of £20.4m for this year.  

The finance lead, councillor Abdul Jabbar said: “I’m very much hoping that when the local government provisional settlement is published on Wednesday, that government will be kind to us and give us the resources that we need to deal with the ongoing issues that we’ve had for many, many years. 

“We’ve got to a situation where the overspend in-year pressure is into the millions.

"We’ve never had that in the past.

"And the reason is absolutely not because we’re handling our finances badly.

"It’s purely and simply because of the pressure we’re seeing in homelessness, children’s placements and adult social care.” 

The overspend is because of the rising demands and cost of adult social care, children’s services and temporary accommodation.

In total the council has spent £16.7m on those three areas, with £8.5m of that spent on children’s services alone. 

Jabbar noted that the council was ‘not alone’ in fighting those pressures, with local authorities across the UK facing similar pressures.

But the situation has been felt particularly acutely in Oldham, where income from council tax is low but social need was historically high – and has soared in the face of the cost of living crisis. 

The issue has raised the spectre of a Section 114 – the council equivalent to bankruptcy.

Some councillors have suggested the council could deplete its reserves – a ‘rainy day fund’ used in recent years to plug budget holes – leaving the council vulnerable to financial collapse. 

These concerns were sharpened by the government announcement of a rise in National Insurance contributions.

Howard Sykes, leader of the Lib Dem opposition, raised the concern that NI hikes in social care would be passed on to councils – pushing them ‘off the edge of a cliff’. 

“We are nearing the brink now,” coun Sykes said.

He also appealed to the Labour government to ‘act soon’. 

Council labour sources have indicated they’ve received ‘positive mood music’ about the announcement tomorrow, which will set out the government’s core funding commitments for 2025.

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