The Greater Manchester borough fighting to plug a huge money problem

Oldham Council has started plugging its huge projected budget hole - but there is a long way to go. The local authority is now facing a £20m overspend, down from £26m predicted earlier this year.

The £6m reduction is largely due to cuts to spending and a hiring freeze. But a sober report discussed at today’s cabinet meeting (November 18) warns the council’s position is ‘still of great concern’.

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It confirmed reserves (or ‘rainy day funds’) are at risk of being ‘depleted’ by 2026.

The figure is based on the current rate of overspending, which stands at just under £10m halfway through the financial year. The overspend comes from three main ‘problem areas’, according to the report: adult social care (£3.8m overspend); children’s services (£6.6m); and spending on temporary accommodation (£2.8m).

The council, like many local authorities across the country, has struggled to keep costs in these areas down due to rising demand and cost of delivering crucial services that they have a legal obligation to deliver - such as supporting those facing homelessness or protecting vulnerable children.

Town hall leaders claim the borough is particularly hard hit because of high levels of deprivation (meaning more people reliant on council support) and lower levels of income compared to other local authorities.

But finance bosses will need to slash another £20m in the next six months, otherwise they will need to dip into reserves - a money pot that is supposed to be dedicated to emergency - to make the books balance for 2025/26.

Yet the council is already struggling to make the savings necessary to cover their overspend from last year. Though £17.6m of the £20.4m cuts have been made, the remaining £2.8m are ‘at high risk of not being achieved within this financial year’ - widening the budget hole.

If cuts aren’t made, £23m could come out of its £57m reserves, leaving the council in a precarious situation for the following year.

Finance director Sarah Johnston explained: “Due to the significant overspend in 2023/24 coupled with the revised budget gap for the 2025/26, the Council’s ability to mitigate the in-year position through short term use of reserves is depleted.”