Luton Borough Council's budget blown by over £8m

Luton Borough Council has projected it will have overspent £8.23m on its budget by the end of this financial year.
Luton Borough CouncilLuton Borough Council
Luton Borough Council

In a report presented to the council’s executive committee on Thursday, February 8, it was noted LBC is still facing an overspend despite cost cutting measures.

The report stated: “The latest outturn position is projecting an overspend of £8.236m in the general fund revenue budget for 2017/18.

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“The budget pressures reported this year are mainly due to overspends in services such as looked-after children and homelessness.

“This has been reported on a regular basis to executive. The council’s monitoring process has highlighted the deficit and measures have been put in place to address the level of overspend.”

The government has cut Luton Borough Council’s revenue support grant (RSG) by £10.7m in 2018/19 and LBC notes that its core spending power is forecasted to only marginally increase by 0.33% from 2015/16 to 2019/20.

This is in stark contrast to the 2.1% national average, and the 2.3% and 2.8% core spending power increases to neighbouring authorities Central Bedfordshire and Bedford Borough Councils respectively.

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LBC added: “In monetary terms, the gap in funding when compared with our nearest neighbour amounts to £10.1m. The council will continue to raise concerns about this position as part of the consultation process to implement the 75% business rates retention scheme and the Fair Funding Review.”

Some of the effects of underfunding are expected to be curbed by an agreed 3% increase in council tax alonside a 3% increase in the precept for adult social care, as well as a proposed shift to a 75% business rates retention scheme from 2020/21.

The report added: “Luton Borough Council is relatively heavily grant-dependent. This means that standard percentage reductions in grant have a greater impact on Luton than on the average authority.

“The reason that Luton is grant-dependent is that it has a higher than average relative need, and a lower than average council tax income per dwelling as most of the dwellings are band A or B.

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“As a result, the old, needs-related grant system gave it above average levels of grant. This has a negative impact on the spending power of the council hence the council needs to maximise its ability to raise income in order to be able to fund demand-driven services such as adults and children’s social care, homelessness, refuse collection and waste disposal.”

According to figures collated by the The Bureau of Investigative Journalism (, the overspend represents the largest of any council in the Eastern region, both in terms of its number and as a percentage of the council’s overall budget (6.19%).