Oldham slashes budget hole by £5m - but must now find £8m in cuts before next year
Oldham council has reduced its budget deficit for 2024/25 from £19m to £14m thanks to a £5m government boost but still needs to find £8m in cuts for 2025/26. The council faces financial pressures from increased demand on services like children's care, adult social care, and homelessness. It plans to use reserves to cover the £14m gap, reducing financial resilience, and will seek public input on where to cut services.
Oldham Council faces a £22 million budget shortfall over the next two years, with finance chiefs warning that essential services will face cuts as the authority struggles to balance its books.
The council must find £14 million to plug the 2024/25 budget gap, reduced from £19 million after receiving a £5 million government bailout. An additional £8 million in service cuts is required for 2025/26, according to finance reports prepared for this week’s budget scrutiny meeting.
Councillor Abdul Jabbar, Cabinet Member for Value for Money and Sustainability, acknowledged the partial relief: “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.”
Rising demand for statutory services has driven the crisis, with temporary accommodation placements jumping from 652 people in July 2024 to 727 by December, creating a £5.8 million overspend. While the number of children in care dipped slightly from 614 to 602, agency costs have negated any savings.
The council had targeted £20 million in savings for the current financial year but achieved only £17 million, leaving £2.8 million unfunded. National Insurance increases and inflation-linked wage rises have compounded the pressure.
Finance bosses plan to cover the immediate £14 million gap by drawing down reserves to £26 million - below the recommended £30 million minimum threshold that maintains “financial resilience.” The £8 million shortfall for 2025/26 will require unspecified service cuts, with residents invited to participate in a public consultation closing February 8.
Despite an additional £23 million in spending power and £13 million in grant increases announced in the government settlement, council planners remain in limbo awaiting February’s final details of the one-year Local Government Finance Settlement.
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