Kinda sounds like a hot spot. Hot spots are extremely itchy. Its almost like a hives if I remember right. They can come from a bug bite. The infected area irritates the dog so they scratch and lick causing the hot spot.
You can go to the pet stores and get a hot spot treatment shampoo to help relieve his itchy skin.
The Best Natural Remedies to Cure Hot Spots in Dogs. There are some remedies to help with hot spots. I'm pretty sure a vet would give you a cream and antibiotics. But you might want to go in and get a skin scraping before you try anything.