Council announces recruitment freeze after ‘serious concern’ over finances

Oldham Council, one of Oldham’s biggest employers, has announced a ‘recruitment freeze’ as it grapples with a predicted £23m black hole in its finances.

The council’s budget bosses have issued a ‘critical’ warning about the state of its books, after its projected overspend went from £20m to £23m in just two months. If the local authority cannot balance the books, it may have to apply for Exceptional Financial Support from the government before the next budget – one step away from declaring ‘bankruptcy’ under Section 114. 

Addressing a cabinet meeting on Monday, October 20, finance boss councillor Abdul Jabbar said: “In terms of what we’re doing [to mitigate the budget gap], we’ve done quite a lot. The exec team has taken decisive steps to strengthen financial control. All non-executive spending now requires director or exec director approval. 

“We’ve also taken the decision to freeze all recruitment, except for critical roles – and they have to be evaluated on a case by case basis. We’re having to do this because of really demanding cost pressure and also the increase in demand that we’ve been seeing.” 

The increased spending comes from ‘surging demands’ for crucial services such as adult social care, children’s services and temporary housing, Coun Jabbar (pictured above) explained. Coupled with rising costs for external contracts like children’s homes and SEND provisions, this has caused ‘significant strain’ on Oldham council – as it has on councils all around the country. 

As a result, the predicted overspend has risen by £2.387m to £23.209m from June to August. The biggest gap is predicted in Adult social care, with an overspend of more than £12m, while temporary housing and children’s services face a £6m and £5m overspend respectively. 

“More residents and businesses are turning to the council for support,” Jabbar went on. “Notably there’s been a sharp increase in demand for SEND services and temporary accommodation, both of which carry a substantial cost. A growing number of working-age adults are now seeking care, making a departure from the traditional focus on the older generation.” 

While the council have emphasised they are ‘taking action’ – with a recruitment freeze in all departments except children’s care – they are also hoping for a ‘light at the end of the tunnel’ from government. 

After last year’s budget, the Labour government declared it would reform the way local authorities are funded, pledging to scrap competitive bidding processes and give areas of greater need – like Oldham – larger pots of money to work with. 

But councils are currently still unclear what that will mean for them in real terms. 

Council leader Arooj Shah said: “Whilst we’re really grateful for the shift to needs-based funding, we have to recognise that the conditions for local government continue to be really challenging. …

“We know there’s a light at the end of the tunnel – we just need that light to come a lot sooner to help relieve some of this. In the meantime, we are as always ready to do whatever it takes to both balance the budget and support our residents in the best way that we can.” 

Without the reforms, Oldham will be facing a sticky situation at its next budget. The council only has £24m left in its ‘rainy day’ reserves – which it has been dipping into to cover budget holes in previous years. 

The local authority has also struggled to apply up to 20 per cent of the cuts they announced during the 2025/26 budget. And with demand and costs growing, officers have warned there are ‘serious concerns’ about the state of the borough’s finances. 

“With the reduced level of reserves held by the Council it is important that this position continues to be addressed as a priority and must be reduced by year end to limit the impact it has on the financial sustainability of the Council,” reads the report presented at Cabinet. “The budget pressures the Council has faced in recent years cannot be mitigated indefinitely given the resources available.”