Alert sounded over ‘huge risk’ to council over its investments

Luton Council has committed huge amounts of money on new schools, the Aquatic Centre, a new M1 junction 10a as well as the £89million Luton Dunstable Busway.

In a report to Luton Council’s overview and scrutiny board, council officers warned: “Significant cost overruns in a combination of these projects would have a huge negative financial impact on the council.”

The council hopes to get money back from developers of sites like Power Court but officers believe a struggling economy means this is not a foregone conclusion. The report adds: “The level of risk has increased as a result of the current state of the public finances, and government support for local authorities is likely to reduce in future.”

Councillor David Franks, the Liberal Democrat leader on the Labour-run council, said he feared the council would end up adding to its borrowings, which already sit at some £293million. Mr Franks said: “Major capital schemes run by Luton Council rarely come in on time or on budget and I have always thought their expectations of financial contributions from developers was optimistic.

“It is no surprise to me that the busway looks like leaving a £9.3million headache, the scandal is that none of the senior Labour councillors seems to have seen it coming and they are still denying it’s a problem. What they will not say is where the money is going to come from, my guess is that they will end up borrowing it.”

A spokesman for Luton Borough Council said risk isn’t necessarily a negative thing balanced against positive outcomes like more jobs and better transport. The spokesman said: “In terms of risk management of capital projects, the key is ensuring the whole project management approach, from contract writing through to delivery, is crystal clear about what is needed and minimises the prospect of program change and delay, while also focussing on opportunities that should arise from the projects.”