Government funding could be lost if council tax is not increased by the maximum amount allowed, says Oxfordshire County Council

Councillor Calum Miller (Lib Dem, Otmoor), the county’s cabinet member for finance, was fielding questions from the performance and corporate services overview and scrutiny committee over initial proposals for the council’s budget from April 2023.

The authority issued stark figures last month, signalling that soaring inflation was expected to cost £27 million in the next financial year alongside an extra £17 million required to satisfy demand for services.

The plan is to save £35 million with the remaining £8.7 million gap yet to be accounted for.

Since those figures were put together, chancellor of the exchequer Jeremy Hunt afforded councils wiggle room to put up council tax by five per cent overall – two per cent higher than initially permitted – with two fifths of the increase ringfenced for adult social care.

Oxfordshire County Council has yet to unveil its plan for council tax but during the meeting, Cllr Miller confirmed the extra two per cent would be expected to bring in another £8.8 million. He also shared the concern of a committee member over the potential consequences of not maximising council tax revenue.

Councillor Bob Johnston (Lib Dem, Kennington & Radley) asked: “Is it not true that if legislation provides for a 4.99 per cent increase, we don’t take it and we subsequently apply for pots of money, that might be to our detriment?”

Cllr Miller replied: “It is certainly possible.

“The autumn statement makes the assumption that local authorities will avail themselves of that. To my knowledge, it has certainly been the case in the past that when authorities have not done so, central government has been more reticent to provide grant funding on the basis that we haven’t availed ourselves of all of the local funding available to us.”

If a council with responsibility for social care wants to ask for more than the five per cent – a figure that was three prior to the autumn statement – it must hold a referendum.

Council leader Councillor Liz Leffman (Lib Dem, Charlbury & Wychwood) later answered a question on the ongoing budget consultation process and referred to data gathered back in August and September – prior to the autumn statement.

It showed that a third of residents would support a five per cent rise – £82 per year or £1.59 per week on a band D property – but backing plummeted when asked about anything north of that.

“It was very clear from the consultation that if you go above five per cent, that is something people would really struggle with,” she said.

“We have to recognise, therefore, particularly in the current context and the difficulties that people are having with their finances at the moment, that going beyond five per cent would probably not be something we would want to do, although that is subject to what you as a committee feel and what we end up with as far as the budget itself is concerned.”

Talk later turned to plugging ongoing funding gaps and council tax remained on the agenda.

Cllr Miller said: “Fundamentally, if we were to not realise support through an increase in council tax, we would either need to find further savings from elsewhere or we could potentially bridge costs for a single year by drawing on some of our funds such as reserves and balances.

“I would strongly advise against that. They are one-off funds, reserves in many cases are earmarked for future purposes, and balances are there to provide us with some degree of insurance against highly unexpected events. Setting a budget isn’t an unexpected event, it is a challenging event.

“We don’t have a huge amount of flexibility other than looking to further savings.”