Oxford City Council is announcing plans for a balanced budget over the next four years.
This is despite the significant impact of the COVID-19 pandemic on several of its income streams and areas of expenditure, and a shortfall in the funding received from central Government to offset this.
The impacts of the pandemic on the national, the local economy and on Oxford City Council itself are very severe. The Council has seen a sharp increase in expenditure to support those in need, together with a sharp reduction in income from leisure centres, town hall room hire, car parks, rents from commercial premises, and earnings from its wholly owned companies Oxford Direct Services Ltd (ODS) and Oxford City Housing Ltd (OCHL).
The overall adverse impact on the Council’s general fund, in this year alone, is estimated at around £12 million, with a further £17 million over the following four years. Government is estimated to provide the Council with around £8 million of funding to assist with COVID-related financial pressures in the current year, with the announcement of a few months’ more funding in the recent Spending Review.
Despite this the Council is proposing to maintain full council tax support for those on the lowest incomes, protect its Youth Ambition programme that helps disadvantaged 11-19 year-olds, and retain its investment in Oxford’s city centre including major works in the Covered Market. The Council also proposing to proceed with capital expenditure to replace and refurbish the Bullingdon and East Oxford Community Centres, and reinstate funding for vital work on climate change to enable Oxford City Council and Oxford as a whole to progress to net zero carbon emissions. In addition, it sets aside significant extra funding for the Council’s leisure services, in recognition this may be needed because of the impacts of the pandemic.
The Council is also proposing £9.57 million of efficiencies and increased income over the 4 year period. The Communities and Housing Services will be reorganised around locality areas to enable them to work more efficiently and deliver a saving. Expenditure on events will be reduced and additional charges are proposed for garden waste and new charges introduced for bulky waste collections. The experience of working through the pandemic is also delivering cost savings, with a planned reduction in office space for staff and a move to ‘cashless’ operation – in line with many other councils. Councillors are being expected to play their part, with no refreshments to be provided at council meetings in future – councillors can bring their own refreshments if they need them.
In spite of all these efforts, in drawing up a balanced Budget (2021-22) and Medium-Term Financial Strategy (MTFS 2021-25), while the Council has sought to retain its emphasis on preserving frontline services, especially for the most vulnerable, it has not been possible to avoid unwelcome proposals entirely. The Council is proposing to meet many of the one-off costs of COVID-19 by spending approximately £11.8 million of its £40 million in reserves and balances.
It should be noted the COVID-19 pandemic has introduced a high level of uncertainty into the medium term financial planning process this year, with further uncertainty over the outcome of future relationship negotiations with the EU.
The reports on the Budget and MTFP will be considered by the Cabinet on 9 December.
The Budget 2021/22 proposes a Council Tax increase of 1.99 per cent, which for a Band D Council Tax charge equates to £6.25 per annum bringing a total charge of £320.17 per annum to fund Oxford City Council. Separate Council Tax precepts support Oxfordshire County Council, Thames Valley Police and Crime Commissioner and - for residents in Blackbird Leys, Old Marston, Littlemore and Risinghurst & Sandhills - Parish Councils.
Measures in the proposed Budget for 2020/21 include:
Enable an inclusive economy
- Regeneration in the city and commercial property purchases of around £53 million
- Investment in infrastructure of around £14 million to drive additional income streams from Oxford Direct Services Ltd (ODS)
Support thriving communities
- Community centre new build at Bullingdon and refurbishment and redevelopment at East Oxford
- Maintain full council tax support for those on the lowest incomes – one of very few councils still to do so
- Fully fund Youth Ambition
Deliver more affordable housing and tackling homelessness
- Provision of loans to Oxford City Council’s wholly-owned housing company Oxford City Housing Ltd totalling £75 million for the acquisition of houses at Barton, minor extensions, and for new house building
- £129 million of affordable housing purchases by the HRA in the next 4 years and £393 million on the purchase of 1,119 social housing units in the HRA over the next 10 years
- Additional ongoing investment into tackling homelessness of £1.5 million including the opening of a new assessment centre for people sleeping rough at Floyds Row
Pursue a zero carbon Oxford
- Additional spend on reducing carbon emissions over the next four years of over £700,000 together with £50 million in the next 10 years to be spent on efficiency measures to our council housing stock towards our target of 95% of our stock being EPC ‘C’ or above by 2030. This will include expenditure on purchasing green gas, and increasing engagement with large emitters, businesses and residents to help set a course to a zero carbon city
The Oxford Model
Underpinning these decisions is the ‘Oxford Model’, in which the Council seeks to in-source work and retain the associated revenues to support the services it provides, rather than outsource to others. The Council’s two wholly-owned companies are central to this. Oxford Direct Services has been severely affected by COVID-19, but still aims to deliver £11.9 million in dividends to the Council over the next four years. Oxford City Housing Limited is being funded to deliver 1,891 homes including 1,119 new council homes, and make payments of interest and dividends to the Council totalling £24.8 million over the next four years.
COVID-19 response to support businesses and communities
Oxford City Council continues to coordinate the citywide response to the COVID-19 pandemic; work that is expected to stretch well into the new financial year and potentially beyond. To date the Council has distributed £0.8 million to support vulnerable households, £26.7 million to help impacted businesses, £0.2 million to support the wider economy, £1.5 million to house and support rough sleepers. The Council acted quickly and decisively to ensure money was deployed where needed, while also acting to prevent fraud.
“In February this year when we set a balanced four year budget with significant investment in the Council’s priorities, we had no idea of the appalling year which lay ahead. The COVID-19 pandemic has had a profound impact on our city, our country and our world.
“First and foremost, the health impacts have been terrible, and we mourn those who have lost their lives or otherwise suffered. We should put on record our tremendous gratitude to all who have worked to help our communities get through to where we are today. The economic impacts of the pandemic have already been severe - firms have seen trade grind to a halt or even collapse, and many people have lost their jobs. The impacts on the City Council have also been very severe, with a combination of addition expenditure needed to support those in need, but also sharp reductions in income.
“Oxford City Council has been particularly exposed because it has, in recent years, sought to increase external income from a variety of sources, including its wholly owned companies, in order to avoid making cuts to frontline services – our “Oxford model”. Precisely those external income flows have been badly affected by COVID-19.
“What we have sought to do in this budget is mitigate the impact of the pandemic on services, especially for the most vulnerable. Because the combined negative impact is expected to be £29 million over five years that has not been an easy task. Government support has been welcome, but it does not go anywhere near balancing out all losses, and we will continue to lobby for more. We have looked to learn some of the lessons from the pandemic in order to operate more efficiently and deliver significant cost savings. We will also be spending over a quarter of our reserves and balances. This is not “free money” - these funds were either earmarked for particular purposes that will now have to be funded differently, or were invested to generate an income that will no longer be available.
“It has not been possible to avoid unwelcome proposals entirely. For instance, we are suggesting introducing a new charge for the collection of bulky items of waste for the first time – most local authorities have done this for many years, but the free service in Oxford has been appreciated and we regret needing to propose this change. Similarly, we will now need to ask all recipients of the garden waste service to pay towards its provision. But we have tried very hard to retain our emphasis on preserving frontline services, especially for the most vulnerable. For instance, we continue to maintain full council tax support for those on the lowest incomes – one of very few councils still to do so. Our acclaimed youth ambition programme will continue, we retain full funding for the redevelopment of the East Oxford and Bullingdon Community Centres, and will take these projects forward. We are also reinstating funding for our vital work on climate change, to make us a net-zero Council.
This has been a dreadful year for many people. Our aim is to play a full part in supporting Oxford’s recovery. We would welcome feedback in our budget consultation on our attempts, set out in this budget and Medium Term Financial Strategy, to get that to happen.”
Councillor Ed Turner, Deputy Leader and Cabinet Member for Finance and Asset Management
Following the Cabinet meeting, the Budget will go out to public consultation on 10 December 2020 until 31 January 2021, with the final decision to be made by Council on 17 February 2021.