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A first look at Oxford City Council’s proposed budget for 2023/24

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A first look at the City Council’s proposed budget for 2023/24 and Medium-term Financial Strategy
Oxford City Council has proposed a balanced budget for 2023/24

Oxford City Council has announced plans for a balanced budget for 2023/24 and a Medium-term Financial Strategy covering the next four years.

The city council has balanced the budget despite facing unprecedented financial pressures as a result of rising inflation and interest rates, the economic downturn and the legacy impacts of the COVID-19 pandemic on some key income streams.

This has been achieved through a focus on boosting income in other areas – in particular through the council’s wholly-owned companies ODS and OX Place – by driving efficiencies through the transformation of services, targeted increases in fees and charges and with the use of further £2 million from the £11 million taken from the council’s COVID-19 emergency reserve.

Oxford City Council remains in a stronger position than many councils that have had to make cuts to bin collections, leisure centres and grants, while several others have declared bankruptcy.

This a result of careful financial management and the council’s “Oxford Model”, which involves it in-sourcing work and retaining the associated revenues to support the services it provides, rather than outsourcing to others.

While infection levels arising from the COVID-19 pandemic appear to be reducing, the impact on council income from commercial rents, car parking, leisure centre usage and room hire continues to be felt.

Increased costs

Like all other organisations, Oxford City Council is impacted by cost inflation, with CPI running at 11.1% in the 12 months to October 2022. This is particularly felt in the rising cost of materials needed to deliver the council’s capital works and repair and maintenance programmes.

The council is planning condition surveys on all its properties, which is expected to result in additional work requirements. Therefore, an additional £6 million has been set aside for capital works over the MTFP, together with a further £8 million for planned works to the Grade II* listed Town Hall.

Energy costs are also sharply up, and the council’s gas and electricity bill is expected to be at least £1.5 million higher even if the Government price cap remains in place beyond 31 March 2023.

Efficiencies

The council continues to drive efficiencies through its Fit for the Future programme, designed to deliver cost savings and improve services by simplifying how customers interact with it, increasing digitalisation, and releasing office space.

Efficiencies totalling £17.9 million are estimated over the four years of the Medium Term Financial Plan (MTFP), with £6.1 million ongoing from 2026-27.

Income

The council has also identified several additional income sources over the four-year MTFP period totalling £7.3 million and £2.5 million ongoing from 2026-27.

Council operations have moved to Oxford Town Hall, releasing its former base at St Aldate’s Chambers, which will now be let to commercial tenants to generate £6 million over the next four years. 

Other new revenues will be generated from property disposals, creating a shared Building Control service, and delivering the Electric Vehicle Infrastructure procurement support for other councils.

There will also be targeted increases in some fees and charges for discretionary council services, including an additional £15 a year for garden waste collection and an extra 50p per hour for city centre parking. Parking charges at suburban car parks have been frozen, and those at the city’s Park & Ride car parks have been made cheaper this year.

The council’s wholly-owned direct services company ODS is also expected to deliver greater returns in the future as it increases its focus on delivering services to other businesses on a commercial basis. 

Profit after tax is expected to grow by £3.49 million over the five years. A proportion of this would be expected to come back to the council through dividend payments, which would be used to support core services.

The council’s wholly-owned housing company OX Place plan continues to deliver 1,829 homes over the next 10-year period, with 1,114 to be acquired by the council’s Housing Revenue Account and the remainder to be sold on the open market. 

OX Place is expected to make dividend payments of £13.5 million to the council over the next four years. It also generates returns in the form of interest payments on loans to fund the construction of new homes.

Council Tax

The budget proposes a 2.99% increase in council tax for 2023-24, with a similar rise assumed for 2024-25 before falling back to 1.99% for the remainder of the MTFS period.

For a Band D Council Tax property, a 2.99% increase equates to £9.76 per annum (or 19p a week), bringing a total charge of £336.31 per annum (or £6.47 per week) to fund Oxford City Council. 

A 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.

Despite the financial challenges, the council proposes maintaining 100% council tax support for those on the lowest incomes. It remains one of few UK councils to do so.

The council also plans to consult on charging extra council tax on second homes, as and when the law changes, to allow it to do so. The council is the first district council to propose this in the country.

Budget proposals

Measures in the proposed budget for 2023/24 and MTFP 2024-27 include

  • Enabling an inclusive economy:
    • £654m of capital investments in Oxford over the four years.
    • This includes £5.5m to upgrade the Covered Market.
  • Supporting thriving communities:
    • Completion of the new Bullingdon Community Centre.
    • £6m to redevelop East Oxford Community Centre.
    • Increase community grants by £120,000 over the four years.
    • Maintain the full council tax relief for those on low incomes.
  • Delivering more affordable housing:
    • Delivery of 1,829 new homes over 10 years, including 942 new council houses.
    • 172 homes, due to be completed by 31 March 2023.
    • Planned maintenance and refurbishments to council housing stock £39 million over four years.
    • Council House rent increases capped at 7% in 2023/24.
  • Pursuing a zero carbon Oxford:
    • £8.7 million to upgrade the energy efficiency of council houses – which the council is seeking to supplement through bids for additional funding from the Government.
    • Implementation of the council’s Electric Vehicle Infrastructure Strategy with the rollout of more EV charging infrastructure across the city.

The reports on the 2023/24 Budget and 2023-27 MTFP will be considered by the Cabinet on 14 December. A public consultation on the budget will open on 15 December on the council’s website.

Comment

“Austerity, Brexit, Covid-19, Russia’s illegal war in Ukraine, and now spiking inflation. The last decade has seen an unprecedented squeeze on the finances of councils across the country.

“While most councils have had to make deep cuts and some have declared bankruptcy, in Oxford, we have maintained vital services, and we have even managed to invest in new facilities – including the new Bullingdon Community Centre.

“I’m pleased to say that after a lot of hard work from every team across the council, we have achieved a balanced Budget – and we have done it without making major cuts to front-line services.

“We’ve done this by using the Oxford Model. We generate significant amounts of income, both from our commercial property portfolio and companies that we own and partnerships that we are involved in. 

“For instance, we get a return from solar energy that we have invested in locally. Our locally-owned housing company OX Place builds homes, including affordable homes, and that gives the council a return rather than the profit being captured by the shareholders of a private developer. 

“Our direct services company, ODS, also provides its services to local companies and organisations, as well as our community, again providing a return to the city council. Together, these initiatives support our council’s finances.

“We also plan to consult on charging extra council tax on second homes as and when the law changes to allow us to do so – we are the first district council to propose this in the country, but we believe it is right that those with the luxury of a second home make a fair contribution to local services.

“In Oxford, we intend to provide our 19 community centres; five leisure centres; all our existing parks; full council tax relief for those on low incomes; youth clubs; and more than £1 million of grants to local community groups and charities. These are exactly the sort of services that are threatened by cuts elsewhere.

“This has been an extremely challenging budget to put together. I am proud that despite the financial squeeze, we are continuing to invest in Oxford. And I’m grateful to our excellent workforce for all they do to deliver council services at a time when they are needed more than ever before.

“Ultimately, we want to make Oxford a fairer and more equal place to live, and we think this Budget helps us to achieve that.”

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

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