Oldham slashes budget hole by £5m - but must now find £8m in cuts before next year

Oldham council will need to find a total of £22m to balance its books for the upcoming budget.

The authority’s budget hole for 2024/25 now stands at £14m – down from £19m after a £5m boost from the government. 

But figures crunched for a finance report ahead of the local authority’s budget scrutiny meeting this week show that Oldham bosses will now also need to find £8m in cuts to services to stay in the black for 2025/26. 

Councillor Abdul Jabbar, Cabinet Member for Value for Money and Sustainability, said: “We welcome the government’s support for local councils like Oldham, which will help us to relieve some – but sadly not all – of the financial pressures we are facing.”  

Why is Oldham in debt? 

Projected debts are partly a result of increased demand on children’s services, adult social care and housing for those facing homelessness – which the council has a ‘statutory duty’ to fulfil.

For instance, the number of people in temporary accommodation rose from 652 in July 2024 to 727 in December, contributing to a predicted £5.8m overspend. 

And while the number of children in care has slightly decreased from 614 in the summer to 602 last month, agency costs have swallowed up the resulting drop in cost. 

The £8m is partly a carry-over from this financial year (April 2024 to April 2025).

Oldham council executives were tasked with finding £20m in savings to balance the books. 

They succeeded in cutting just over £17m.

But £2.8m remains to be found.

Other pressures like the rise in National Insurance and wage increases in line with inflation also play a factor. 

How will they cover the costs? 

Oldham finance bosses plan to plug the £14m gap using the townhall’s reserves – the borough’s ‘rainy day fund’ – bringing the level of available reserves down to £26m.

Local authorities are advised to have at least £30m in the pot – meaning it would ‘significantly reduce the level of financial resilience’. 

The budget report states that by transferring around £4m into the reserves put next year, it aims to restore some balance. 

Meanwhile, the £8m gap for the coming financial year will have to be cut from the budget.

This could mean an impact on services delivered by the council – though exact details of what would be cut are yet to be confirmed.  

The council has appealed to the public to weigh in on the decision making, with residents asked ‘Where do you think the council should save money?’ in a public consultation open until February 8. 

Will the government provide more support? 

Oldham council will have an additional £23m in spending power next fiscal year due to a government settlement, along with a net increase of £13m in grants. 

But the government will only confirm the full details of the ‘Final Local Government Finance Settlement’ – a one-year settlement scheme for local authorities – in February, meaning the council can’t factor it fully into their planning at this moment, according to the report.

---

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.