Luton MPs to lobby Parliament as council faces a £10m budget overspend

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Calls for the town to be classed the same as London boroughs in the government’s funding formula

Luton’s Labour MPs are to put pressure on the government over local authority funding after the borough council revealed its budget is forecast to be more than £10m overspent this year.

The local authority’s finance portfolio holder and Labour Limbury councillor Rob Roche told its executive he arranged a meeting to discuss the issue with Luton North MP Sarah Owen and Luton South MP Rachel Hopkins.

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“They’re happy to take it up in Parliament,” said councillor Roche. “We’ll attempt to apply pressure that way.”

Luton councilLuton council
Luton council

He called for the town to be classed the same as London boroughs when it comes to the government’s funding formula for councils.

“Some preemptive measures were taken at the close of last year’s accounts to improve the capacity of this year’s budget,” according to councillor Roche.

“This included setting aside £5m of one-off funding to meet the impacts of rising inflation and lessen the impact of the coronavirus, while £2.4m of this is used in the forecast to fully meet the early impacts reported by services at quarter one,” he explained.

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“Around £7m of ongoing activity led service pressures were estimated for this year. But these have increased, with services now reporting £8.3m.

“The increase includes energy prices, the cost of maintaining property and highways estate, and income levels recovering slower than anticipated across services, such as parking, licensing, legal fees, transport and planning.

“Pressures on pay costs have added a further £3.9m unbudgeted shortfall on this year’s financial position.

“Given the combined overspend pressures reported, the full £2.2m contingency has been absorbed to help meet some of the costs, with £0.25m of specific energy inflation contingency also deployed for short-term cover, reducing the net forecast overspend on general fund services to around £10m.

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Luton council facing £10m budget overspend - with call for Government help as co...

“Similar costs are affecting the forecast for the housing revenue account, namely £1.3m for increased repairs and maintenance, for public health at £0.1m and the central schools budget also £0.1m, with overspends forecast in each area.

“Actions are needed now to improve the forecast for this year and the prospects for next year’s budget,” he added. “A range of recover measures are under way across all services towards improving the current position.

“We need to recognise the risk of inflation going even higher, bringing extra cost pressures which could impede overall recovery.”

Labour Lewsey councillor Aslam Khan said: “After Covid things have changed. With the pay gap we’re in a desperate situation, so we have to put pressure on the government.

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“Every council is saying we won’t survive unless we get more money from the government. It’s not just us.

“We can borrow more, but we have to balance that as we’re putting the council at more risk. We’ve done that with the airport. We’re looking at certain aspects of the town centre.

“We can’t rely on borrowing even more. We’ve maxed that out.”

The executive agreed to “note the significant general fund services forecast overspend of £10.066m”.

LBC’s scrutiny finance review group is due to consider this report at its meeting today. (Wednesday, August 17)