Council proposes measures to close budget gap to £900,000

A series of measures have been proposed to close the large majority of an £11.2 million funding gap as Oxfordshire County Council continues the process of setting a budget for 2024/25.

Proposals to save more than £9.8m in 2024/25 were set out by the county council in November as it seeks to set a balanced budget in the face of continued inflationary pressures and growing demands.

Originally the council had a shortfall of £9.1m to reach a balanced budget but this increased to £11.2m in December after it became clear that grant funding support from central government was not as much as anticipated. The council has proposed measures to close that gap to the extent that there is now a remaining £900,000 shortfall that needs to be closed by the time the council sets its budget later in February.

Councillor Dan Levy, Oxfordshire County Council’s Cabinet Member for Finance, said: “We did not receive any additional money from government to close what was a £9.1m gap when we first published our draft budget in late November. Quite the opposite.

“The government has spoken widely about a 6.5 per cent increase of funding to local government. As we’ve said previously, this was a case of smoke and mirrors. This increase assumed councils would take the maximum council tax rise and includes funding announced this time last year. There was nothing new in this sum at all.

“Local government as a whole continues to express deep disappointment having already been viewing the second half of the decade with great concern. The government’s dealings with the sector so far this winter did nothing to alleviate those concerns.

“Our track record of responsible financial management means that Oxfordshire County Council has been in a more resilient position than many other authorities. However, the overall position is extremely challenging. Even now we remain £900,000 short of what we need for a balanced budget.

“Over the coming weeks we will continue to work hard to review our costs and identify further potential measures so we can close the gap and balance the budget.”

It remains the case that budgets in both adults and children’s social care will increase in 2024 with investments to meet pressures outweighing savings proposals.

What are the new proposals?

The new proposals that have been made include:

• A further £3.4m can be added to the budget on a one-off basis for 2024/25 as a result of district councils collecting more in council tax than was originally estimated.
• On the basis of analysis of anticipated demand for adult social care services, £1.5m of demographic of funding that was originally proposed to be added to the budget is now judged not to be required. A total of £8.5m of extra funding for demographic/population growth was included in existing forward plans and this remains. The council has always been responsible in planning ahead over several years to deal with pressure on adult social care stemming from population growth/demographic increases.
• Consumer Price Index Inflation was 3.9 per cent in the year to November 2023, down from 4.6 per cent in October and 6.7 per cent in the 12 months to September 2023. As such, £2.3m that was originally thought to be needed to cover anticipated costs of care packages within adult social care is now assessed not to be needed. A total of £12.3m previously agreed funding remains available to support increases in the cost of care packages from 2024/25.
• When the budget was originally proposed, a £14m investment in children’s services was proposed. However, there were also some savings. These savings are focused on things such as reducing the reliance on expensive agency staff, focusing on keeping families together by preventing the need for children to become looked after by the council, and opening new children's homes/increasing foster capacity to reduce the need for expensive out of county placements. However, half of these savings were not built into overall budget assumptions due to the risk of them not being achieved. Further work has now been done on the achievability of savings and this risk adjustment can be reduced by £1.1m from £5.2m to £4.1m.
• Because of anticipated future reductions in funding there is a need to reduce the size of the organisation in future. A new saving of £1.5m relating to workforce restructuring has been added in 2024/25. Planning for this is underway.

The overall projected budget for 2024/25 is more than £614m. The draft budget is based on a 4.99 per cent council tax rise in 2024/25, with two per cent of this being ringfenced for adult social care. No final decision on council tax or any element of the budget will be taken until 20 February 2024 when all 63 county councillors meet at the annual budget setting meeting of the county council.