Looks like a combo of hot spot/diet related issue without knowing anything about the dog. If you can, I would speak with the owner first before changing anything. On a wild guess, it looks like a short-haired terrier/shepherd mix? If that's the case, these types of dogs have very sensitive skin. I remember a friend of mine having a terrier mix that was allergic to nearly everything under the sun.
For hot spots, Malacetic wipes do wonders (and are available OTC). That or chlorhexadine foam (the Dechra stuff works well) 2/3 times a day over a week should help clear it up. Sometimes dogs weird out about the foam, but the wipes are normally pretty good, and they smell a bit like ripe peaches.
As
@nhdeadhead mentioned, fish oil works wonders with dry skin on dogs; if the dog is on a food with chicken as a protein, changing gradually to a fish-based diet without wheat or corn will help too, and may obviate the need for fish oil supplements. A high-quality food will be more expensive, but will solve many, many issues, and is the first thing that I have ever heard trainers and experienced, well-meaning vets recommend.
As a note, if the dog is being walked in an area where people are salting sidewalks ("pet-safe" salt or otherwise), make sure to clean the dog's pads every time they go out - salt does terrible things to canines. Applying Musher's Secret dog paw wax also helps, but it might take some training to get the dog to allow you to wipe paws/apply the wax too.
The other thing that it might be is a skin infection, but that would likely require a trip to the vet and a skin swab/cytology for a vet to diagnose. The course of treatment for that is likely antibiotics, which are expensive by comparison.
