Oxford City Council Proposed Budget 2024/2025 and Medium Term Financial Strategy

The Council is also calling on politicians of all political colours to end the continued financial squeeze of local authorities or risk communities being harmed.

The Council points to inflationary pressures including sharply higher energy costs, temporary housing costs, construction costs, borrowing costs, and additional costs imposed through the need to meet new legislative requirements. At the same time it is assumed that Government will continue to cap local authority income from council tax, business rates and council house rents.

While a rising number of local authorities have already declared - or have issued warnings about - bankruptcy, Oxford City Council is not currently in that position. The Council’s ‘Oxford Model’, generating nearly £20 million of income each year from its wholly-companies and commercial property, together with sound financial management, has meant that the Council is not currently at risk of bankruptcy, however, a number of significant measures must be taken to stabilise its finances.

A five-year balanced budget can be achieved through taking further efficiencies of £2.0 million through service transformation, increasing some fees and charges for discretionary services such as parking and garden waste collection, and utilising a further £7.3 million of earmarked reserves. In addition to this service reductions of around £200,000 will be implemented in 2024-25 - rising to £1.4 million in 2025-26 if additional Government funding is not secured.

As a result of these measures, the Council is able to maintain its leisure and parks provision, continue to support youth work and carry on its programme of council house building and upgrading existing stock. New investments are also planned in Electric Vehicle infrastructure deployment, improvements to the Covered Market which will result in additional income, regeneration of Oxford’s West End, which will benefit the city and provide an income return to the City Council, and work to secure the reopening of the Cowley Branch Line to passengers.

Increased costs

With CPI running at 6.7% in the 12 months to September 2023, like all other organisations Oxford City Council has been impacted by cost inflation. This is particularly felt in the rising cost of materials needed to deliver the Council’s capital works and repair and maintenance programmes. Energy costs remain £1.2 million per annum higher than they were two years ago.

Excluding pay inflation there is increased expenditure totalling £7.3 million estimated over the four-year period. Of this amount a substantial proportion is charged to capital to assist with the managing of the programme to deliver these projects and drive income to the council.  

Significant new costs include the need for more planning officers to meet the new targets set by Government for dealing with planning applications; resourcing of the Council’s Project Management Office to drive efficiency programmes and strengthening of its cyber security management. An additional £300,000 per annum is required to meet sharply increased need for Temporary Accommodation for people who have lost their home as a result of unprecedented rises in rent levels and contraction in the supply of private rented accommodation, coupled with additional pressures from refugee and migrant households whom the Council has a duty to assist.

Efficiencies

The Council continues to drive efficiencies through its “Fit for the Future” programme, designed to deliver cost savings and improve services by increasing digitalisation and simplifying how the customers interact with the council. Additional efficiencies totalling £2.3 million are estimated from 2027-28.

Income

The Council has also identified a number of sources of additional income totalling £6 million over the four-year MTFP period. This includes a significant improvement in commercial rents including potential changes to upper floors of city centre property with a primary focus on Broad Street and George Street.

It also includes uplifts in planning fees, income from the Zero Emission Zone pilot and the installation of Electric Vehicle charging infrastructure, income from the Oxford Museum, and one off grant funding for retrofit that will replace some existing Council workstreams.

There will also be targeted increases in some fees and charges for discretionary council services, including an additional £10 a year for garden waste collection, 10% on land charges, and some increases in car park charges, though at Park and Ride’s discounted tickets in conjunction with a bus ticket will continue to provide good value.

The Council also continues to benefit from income generated by its wholly-owned companies – ODS, which provides direct services to Oxford’s citizens, to businesses and to other local authorities; and OCHL, trading as OX Place – which is bringing forward new council housing, shared ownership and affordable rent housing, together with some market housing, within Oxford and outside the city.

ODS will be paying a £4 million dividend to the Council and, once its 2022-23 accounts have been signed off by the auditors, the ODS Board will consider declaring an additional dividend over and above the £4 million. However, projected surpluses from ODS’s LATCO business that provides services for the Council, are now expected to be around £1 million lower than previously forecast at £1.9 million per annum for the next few years, as it is impacted by rising costs.

Market conditions have also led to a downgrading of the forecast OCHL dividend payment to the Council from £14.9m to £12.9m over the next five years. It is still due to deliver 1,428 dwellings over the life of the development programme, 1,277 of which will become council housing or shared ownership housing, leaving 151 for open market sale.

Council Tax

The Budget proposes an increase in Council Tax by 2.99% for 2024-25 before falling back to 1.99% for the remainder of the MTFS period. Council Tax represents just 20% of the Council’s overall income.

For a Band D Council Tax property, a 2.99% increase equates to £10.06 per annum (or 19p a week), bringing a total charge of £346.36 per annum (or £6.66 per week) to fund Oxford City Council.  Separate Council Tax precepts support Oxfordshire County Council, the Thames Valley Police and Crime Commissioner and the Parish Councils in Blackbird Leys, Old Marston, Littlemore and Risinghurst & Sandhills.

The Council currently provides 100% Council Tax Reduction Scheme discount for qualifying claimants and is one of relatively few authorities to do so. Given the severe financial pressures it is facing, it is proposed that the maximum discount is reduced to 85% from the 2025-26 financial year, which will provide an additional £230,000 of Council Tax income, net of costs of collection. This proposed change will be kept under review and precise future arrangements will be the subject of detailed public consultation.

The Council also plans to remove the 1 month 100% unfurnished empty homes discount in line with what most local authorities have already done. This will encourage landlords in particular to reduce voids and speed up the letting process returning homes back into use more quickly.

Budget proposals

Measures in the proposed Budget for 2024/25 and MTFP 2025-28 include:

• Enabling an inclusive economy:
  • £553 million of capital investments in Oxford over the five-year period
  • This includes £2 million for repairs to failing facades on Broad Street and Turl Street
• Supporting thriving communities:
  • £4.4 million to complete transformation of East Oxford Community Centre
  • Up to £4 million investment to refurbish our leisure centres
• Delivering more affordable housing
  • Delivery of 1,428 new homes, including 1,277 new council houses
  • Planned refurbishment and improvement of Council housing stock £146 million over four years
• Pursuing a zero carbon Oxford
  • £7.6 million retrofit programme to upgrade the energy efficiency of c300 council houses
  • Rollout of another 300 Electric Vehicle chargers across the city

The reports on the 2024-25 Budget and 2024-28 MTFP will be considered by the Cabinet on 13 December. A public consultation on the Budget will open on 15 December on the Council’s website.

Comment

“In recent times, each year I have had to comment upon how the budget we face is the hardest yet.  That is so because our funding as a City Council has been eroded each year in comparison with the pressures that we face. This year, is substantially worse than others: the context is exceptionally hard. 

“We face unprecedented rises in costs to meet temporary housing needs, energy bills, construction costs, interest charges on borrowing and increased statutory obligations to our council house tenants.

“These sort of pressures are blighting local government.  We are aware that across the sector councils are facing bankruptcy. Closure of leisure centres is becoming an increasingly common phenomenon across the country. The Conservative leader of Hampshire Council talked of facing “financial meltdown” and stated that “the government must intervene”.

“While our Oxford Model, generating income from our companies and our commercial property, as well as sound financial management, has meant that we are not currently at risk of bankruptcy, we have to take measures to stabilise our finances.  We have tried to safeguard front-line services, and in particular focus wherever possible on delivering services more efficiently and on generating new streams of income. 

“However, this budget includes some unwelcome immediate service cuts and increases in charges. And next year, if our campaign for proper resourcing from central government does not bear fruit, we will need to look at significant cuts across our communities service area. We would also have to revisit our policy, unusual nationally, of exempting low income working-age households from council tax benefit entirely.   

“These changes are a last resort, and even after them we expect to retain our network of leisure centres and parks, to move forward our major programme of council house building, and to continue to support youth work and community groups.  Often, the right thing to do actually saves money: for instance, our investment in sustainability will provide a growing income stream from charging points for electric vehicles, and our investment in the covered market will safeguard the income stream from that valuable resource. 

“In the meantime, we will send a message to politicians of all political colours loudly and clearly: local authorities have been cut to the bone since 2010 and the days of austerity, and this cannot continue without communities being harmed.  We will continue to do our bit, making our organisation more efficient and going the extra mile to serve our communities, but we need central government, too, to play its part.

"Obviously with recent changes the administration doesn't have a majority on the City Council although it is by far the largest group. We always listen to the views of opposition councillors (both directly and through the scrutiny process), and welcome feedback and good ideas from councillors as well as the wider public. Our situation with the budget is challenging and it is important all councillors work together to handle this as best we can."

Councillor Ed Turner, Deputy Leader and Cabinet Member for Finance and Asset Management