Cabinet to hear how inflation and other risks could deepen savings requirements

Oxfordshire County Council’s cabinet is set to hear of the financial risks that could require further belt-tightening beyond the deep savings that it is known will already have to be made to budgets in 2027/8 and beyond.

The council needs to make savings of at least £15.5m in 2027/28, rising to £22m in 2028/29, as well as achieving all existing savings, to manage cuts to its funding announced by the government earlier this year.  

A balanced budget for 2026/27 was set in February 2026 with warnings that future years would become more difficult because of government decisions to change formulas governing the distribution of funding – with some councils receiving more and others less.

However more savings will be required as inflation in the wider economy or demand for the council’s services increases the council’s costs beyond existing the assumptions built into the budget. The cabinet will receive a report at its meeting on Tuesday, 14 July detailing these risks and other updates known at this stage.

Councillor Dan Levy, Oxfordshire County Council’s Cabinet Member for Finance, Property and Transformation, said: “The government has already cut Oxfordshire’s grants. However like any responsible organisation we forward plan and anticipate risks which may emerge. There are a number of these which could exacerbate an already difficult situation that is not of our making locally.

“The county council has a long track record of responsible financial management. We have consistently set aside contingency budgets to deal with uncertainty about demand and other risks. 

“We know there are risks in the wider economy – everybody knows from their own household budgets or from running a business that inflation remains a persistent problem in the economy. When prices keep rising this also increases the cost of the council’s services.

“As we look towards setting our budget for 2027/28 we are already planning carefully and looking at options to reduce expenditure and make savings. We must balance budgets for services that the council is responsible for to the funding that we expect to be available. People will hear more detail about this in autumn and winter. We will protect frontline services as far as we can.

“We recognise that there are areas of the country with higher levels of deprivation than our own, and it is right that the people in those places receive the support that they need. However, it is disappointing that councils like Oxfordshire will see real terms reductions in grant funding as a result and it leaves us more exposed when extra pressures arise.

“The government also assumes that we would set Council Tax rises at 4.99 per cent each year giving us no real flexibility locally.”

What are the risks being presented to cabinet?

• Demand for children’s social care continues to rise along with the cost of placements driven by a lack of capacity in the market nationally. The government has indicated it will take action to manage excessive profits by children’s social care providers, but it is unclear how this will be implemented.
• National changes are planned to the Better Care Fund, which was introduced in 2013 to enhance the integration of NHS and council social care services across the country. There is potential for the council to experience lower funding as a result of changes.
• The government is currently planning a fair pay agreement in adult social care to address national recruitment and retention issues. This will be implemented in 2028. The implementation of this represents an as yet unquantified costs risk for adult social care services.
• Integrated Care Boards across the country are operating under significant financial pressure. This increases the potential for unfunded pressures emerging which could impact adult social care services because a number of vital services are jointly funded by local authorities and the NHS.
• The impact of continued inflationary pressures in the UK economy on council services and on the setting of the National Living Wage – which remains unknown.