Coronavirus blows £50m 'black hole' in Luton Borough Council's finances

Luton’s coronavirus crisis economic black hole is in the region of £50m, it has been revealed.
Watch more of our videos on Shots! 
and live on Freeview channel 276
Visit Shots! now

The borough council anticipates a loss of income for its airport company of around £45m in 2020/21.

The forecast reduction in business rates, council tax, rents, fees and charges adds a further £4m to the shortfall.

Hide Ad
Hide Ad

The local authority is asking the government for £50m emergency revenue funding for this financial year.

Coronavirus has blown a 50m black hole in Luton Borough Council's financesCoronavirus has blown a 50m black hole in Luton Borough Council's finances
Coronavirus has blown a 50m black hole in Luton Borough Council's finances

These figures include the current £9.4m of support grants recently extended by central government, according to Labour High Town councillor Andy Malcolm.

“Covid 19 is, and will continue to, decimate airport passenger numbers with the operator currently forecasting a reduction of at least two thirds in 2020/21,” he explained.

“Our current estimates suggest an income loss of around £45m for London Luton Airport Limited (LLAL).

Hide Ad
Hide Ad

“This will remove the ability to pay a dividend over the next two years.

“When taking into account the expected reduction in business rates, council tax, rents, fees and charges, this will result in a shortfall of about £49m in the council’s budget for 2020/21.”

Councils across England are to receive a further £1.6bn to help deal with the impact of the pandemic, doubling the amount allocated since the crisis began.

Councillor Malcolm, who’s the executive member for finance, said: “The work to expand our commercial income has been absolutely essential.

Hide Ad
Hide Ad

“This is against a backdrop of cuts to grant support from central government and necessary savings of £138m since 2010.”

The latest calculations suggest a bigger loss of income for the borough council than first feared.

Liberal Democrat group leader and Barnfield councillor David Franks gave a cautious initial estimate that losses might be between £30m to £35m based on his own statistics.

Council leader and Labour Lewsey councillor Hazel Simmons said: “We’ve asked for emergency revenue funding from the government of £50m for 2020/21, in addition to the welcomed Covid 19 response funding.

Hide Ad
Hide Ad

“Our town was recently identified as the second most vulnerable economy to coronavirus in a report by the Centre for Cities.

“Just over 40 per cent of jobs here are classed as vulnerable because of the high numbers of employees in the aviation and motor industries.

“This not only places extra strain on the financial and emotional wellbeing of our residents, but on the services which support them.”

In contrast, Central Bedfordshire Council’s revenue stream is not aligned to a large transport hub, but it too is feeling the pinch from the national lock down.

Hide Ad
Hide Ad

A CBC spokeswoman said: “We welcome the additional funding, as it will provide much needed breathing space from the extra pressures councils are shouldering and the loss of income we are experiencing.

“Local authorities have a hugely important role to play in supporting everyone, but particularly the vulnerable through this crisis.”

That theme was shared by the borough council leader, who added: “The impact of coronavirus has been felt already in the most painful way by our communities, which have lost friends, relatives and neighbours.

“We are incredibly proud of the way Luton has pulled together to support one another, including our workers and carers who’re doing such a wonderful job in such difficult circumstances.

Hide Ad
Hide Ad

“The impact on the council’s budget is also profound,” she warned.

“Throughout the last decade of austerity, money from the successful growth and operation of the airport, owned solely by the council’s airport company LLAL, has helped meet the cost of essential services for our residents and grants to our invaluable voluntary and charity sector.”