Budget planning goes up a gear as councils awaits finance information from new government
Updates on Oxfordshire County Council’s budget planning for 2025/26 and beyond are to be presented to its cabinet on Tuesday 15 October with new budget proposals to be published in late November and a final budget set in February 2025.
Councils across the country are waiting to hear what the newly elected government’s approach to local government finance will be with some information potentially becoming available as part of the chancellor’s autumn statement on 30 October
Local government has experienced reductions in grant funding over the last ten years while demands on services have increased – especially in children’s and adults’ social care. This has led to a period of widescale financial challenges in the sector.
When Oxfordshire County Council set its budget for 2024/25 it set out broad plans for 2025/26. It noted that extra money would be needed for demographic growth in adult and children’s social care; increases in waste tonnages; anticipated population growth and housing changes; and inflationary pressures.
It was calculated at that early stage that there would be a shortfall of £13.9 million for 2025/26. This shortfall will need to be closed as the budget setting process progresses, with any additional or new pressures potentially adding to the shortfall and any funding or new savings subtracting from it. The council will need to set a budget that is balanced to the available funding in February 2025.
At this stage calculations are being made on the basis of a 1.99 per cent council tax rise – the new government has not set out a policy on any council tax rise limits. Other key information also needs to be confirmed, including how the national living wage will operate from 1 April 2025.
Councillor Dan Levy, Oxfordshire County Council’s Cabinet Member for Finance, said: “Although October is when our budget setting process goes up a further gear, a lot of planning takes place before this. Indeed, we set our broad parameters for 2025/26 when we set a budget for 2024/25.
“We are keen to see how the new government will approach local government finance given the well documented challenges and difficulties that councils have faced in recent years. At Oxfordshire County Council, our sensible financial management and forward planning has meant we’ve remained in a resilient position. However, as was clear back in February, our starting point for 2025/26 is a £13.9m shortfall in funding, with any new pressures potentially adding to that.
“We hope that the government will think long and hard about local government finance, acknowledge the challenges faced now for many years and come up with ways forward that help us to continue delivering the crucial services we provide. We will work hard to keep our end of the bargain by doing all we can to make sure our services are as efficiently run as possible.”
Although local government may be given at least some further information by the chancellor on 30 October, individual councils will not hear about the grant funding levels until late December. The council will publish its first detailed budget proposals for 2025/26 in late November. A consultation will follow building on information already gained from local people through the council’s annual residents’ survey, a budget simulator exercise and through engagement events that took place over the summer.
Initial budget proposals will change and be adjusted as more information becomes available with a final budget not being set until 11 February 2025. Cabinet and scrutiny committees will receive updates throughout the winter.