A CPI rate left unchanged over-estimated council rent income by £3.848m. Councillors vote on 3 September to draw £3.5m from reserves. Rents were set correctly.

Oxford City Council’s housing budget for this year was never balanced, and councillors are being asked to draw £3.5 million from reserves on Thursday to put that right.

The council’s Group Finance Director, Alistair Rush, has told a special meeting of full council that the Housing Revenue Account budget approved in February “included a technical error, which means that the budget for 2026 - 2027 was not balanced when approved”. His report was published this week alongside the agenda for the meeting on 3 September.

The council’s own announcement of the meeting leads on £410,000 of community spending and mentions the housing budget in a single line. The report itself is blunter about what happened and what follows if the vote fails.

What went wrong

Council rents for 2026-27 were set using the Government’s Rent Standard, which for this year allowed an increase equivalent to the Consumer Price Index plus 1%.

The rent charged to tenants was worked out correctly. The budget was not.

According to the report, the financial model behind the budget “had not been updated for the relevant CPI rate, instead the rate relevant to the previous financial year was left unchanged”. That produced an income figure that was too high.

The consequences, as the report sets them out:

  • rental income is now expected to be £3.848 million lower than the February budget assumed
  • a forecast surplus of £1.47 million becomes a deficit of £2.030 million
  • £3.5 million of Housing Revenue Account reserves must be drawn down to close that gap
  • those reserves stood at £7.809 million in the draft 2025-26 statement of accounts

On the report’s own figures, the drawdown takes about 45% of the housing account’s useable reserves and leaves roughly £4.3 million. The report does not give a post-drawdown balance; that is our arithmetic on the two numbers it publishes.

Chart showing Oxford City Council's Housing Revenue Account moving from a forecast surplus of 1.47 million pounds when the budget was approved in February 2026 to a forecast deficit of 2.03 million pounds, a swing of 3.5 million pounds, and 3.5 million pounds being drawn from reserves of 7.809 million pounds
The £3.5m drawdown is the gap between the surplus the February budget forecast and the deficit now expected. Chart by The Oxford Post, from the Group Finance Director's report to the 3 September council meeting

Paragraph 7 of the report is unambiguous on the point tenants will care about most: “tenants have not been over-charged and have not been impacted by the issue identified or the measures taken to resolve it”.

Why the vote matters

The Housing Revenue Account is ring-fenced. It runs the council’s own housing stock and is funded by rents, not by council tax, so a shortfall in it cannot be passed to general council taxpayers.

But the law requires it to balance every year, and on the council’s own account it currently does not. The report is issued by the council’s section 151 officer under the section 114 procedure, the formal mechanism a finance director uses when spending is heading past available resources.

The legal section spells out the two paths. If councillors approve the drawdown, the report says, “the issue will be remedied and the unlawful action will no longer be ongoing”. If they do not, the council “would open itself to a report under s114”, which brings restrictions on spending, and it would stay in breach of the balanced budget duty.

The alternative of finding savings instead was considered and dropped. With four months of the financial year already gone, the report says matching the shortfall that way would mean identifying “the annual equivalent of £4.67 million” in efficiencies.

More pressure underneath

Stripping out the rent error, the quarter one forecast still shows the housing account under strain. The report names three pressures:

  • the cost of the waking watch service
  • mitigating tower block safety risks
  • potential costs from damp and mould in the housing stock

Officers say they will work through the year to offset these with efficiency savings, and that investment in the stock should reduce maintenance spending over time. Restoring the reserves to their present level is left to the HRA Business Plan.

What happens next

The council says it has identified extra checks so the same thing cannot happen again. Those will include reconciling the rent-setting calculation against the rental income budget, and extra oversight and quality assurance on the financial model. The report also raises the possibility of an annual review “by an independent housing finance expert and/or as part of the internal audit programme”. The Audit and Governance Committee is to be updated.

What it means for you

If you rent from the council: your rent for this year was calculated correctly and is not affected. Nothing in this report changes what you pay or what services you get in 2026-27. The money is coming from the housing account’s own savings.

If you pay council tax in Oxford: this does not touch the General Fund. The housing account is legally separate.

If you want to watch: the meeting starts at 5pm on Thursday 3 September in the Council Chamber at Oxford Town Hall, St Aldate’s. Members of the public can attend to observe, and the agenda front sheet says it can be viewed live or afterwards on the council’s YouTube channel. The deadline to register a public address passed at 5pm on 27 August.

The same meeting will also vote on £410,000 of one-off community spending, from public toilets to free swimming lessons.

Both decisions land while the city’s future structure is being settled. Oxford City Council is due to be replaced under local government reorganisation, and we covered the response to the Greater Oxford consultation earlier this month.