My mare suffers from very much of the same thing, but all over her body. My friend with 40+ years of experience has a "concoction" (as we call it) that we use and has worked WONDERS for her itchy tail / butt. I put it on 1-2 times a week, more often if I'm riding regularly.
Mix together one part baby oil, one part hair conditioner (any kind works, but we try to use one from a salon that has no fragrance (big cheapest bottles-Sally's Beauty supply), one part listerine (the gold colored kind - original - NO flavor).
Its a fairly thick mixture and NOT a fly spray. We put it all over her tailbone, front and back, on her hind-end (under tail), and at the base of her mane and forelock.
The other best advice I can give you is make sure his sheath or her teets (depending on the horse) is cleeeeeeeeeean!!! Those areas get sweaty, crusty, and yucky this time of the year and they itch their butts like crazy due to the itch between their legs.
Best of luck!