It sounds like he could be having an allergy, skin infection or even mange or a combination of things.
If there is an obvious odor, then there is definitely an infection. Most infections are secondary to something else, but need to be treated at the same time. There are bacterial and fungal infections, sometimes you can look at the skin and get a better understanding for which kind of infection.
Mange is caused by a mite. There is one kind that is contagious and one kind that is not, it is more an immune system problem. A skin scrape will help to rule out these. They both cause hair loss and reddened skin.
Allergies can be diagnosed by a history of itching every year at this time, getting worse over the years and ruling out other causes.
The best thing would be a veterinary exam. There are too many different things that can go on with the skin that cause itching and reddness to tell you an exact cause. There is a dip called LimeDip. It is very stinky and stains jewelry and concrete yellow, but it helps with mange and skin infections. But you have to bathe and then dip him every 3 to 4 days for a month.
Hope that information is helpful. Skin problems can be very frustrating.