Luton Borough Council to undergo independent review of its finances

Luton Borough Council is one of eight local authorities to undergo an independent review of its finances.

Friday, 2nd July 2021, 3:18 pm
Luton Town Hall
Luton Town Hall

The eight were granted exceptional support from the government because of sharp drops in income, mainly as a result of coronavirus and the national lockdowns.

Luton's reliance on millions of pounds of airport finance was laid bare during the pandemic.

An emergency budget approved by the borough council led to 365 redundancies as part of attempts to plug a £22.2m budget gap.

The commercial arrangement between the local authority and its airport company London Luton Airport Limited (LLAL) was initially part of an external assurance review of the council's finances.

A government directive allowed LBC to borrow up to £35m to fund services last year, with a further £14m to follow for 2021/22.

Labour council leader Hazel Simmons said at the time: "As part of the due diligence to reach this stage, the Ministry of Housing, Communities and Local Government has undertaken a financial appraisal of the local authority.

"It found that we're financially well managed and have made prudent decisions, but that we've been catastrophically impacted by the exceptional events of the past year."

Luton Borough Council approved a stabilisation plan for LLAL this week, agreeing a £119m rescue package with a contingency of £20m.

It means loans totalling more than £500m have been made available by the council to its airport company.

The Chartered Institute of Public Finance and Accountancy (CIPFA) has been appointed to look at financial and risk management, deliverability of savings and efficiency, according to the Local Government Chronicle (LGC).

Its findings will "inform decisions" on support in 2021/22, said a report in the LGC.

It quoted CIPFA chief operating officer Dan Worsley saying: "The financial position of many local authorities has been precarious for some time, but has been worsened significantly as they've grappled with the impact of Covid-19 on their communities and their finances.

"It's no great surprise that some councils have found themselves in difficult waters.

"As committed advocates for the public sector, we would hope this acts as an important signal to other councils experiencing financial challenges that help is available."

Local government minister Luke Hall said in the LGC article: "Even with the considerable support already provided there'll be individual councils with unique circumstances, which has been exacerbated by poor financial management on their part in some cases.

"These reviewers will ensure each of the councils have plans in place so that they are financially sustainable, minimising the need for further government support and working in the interests of the communities they serve."

Luton Liberal Democrat leader and Barnfield councillor David Franks is asking what the true figures are regarding loans to LLAL.

"In a report discussed by the audit and governance committee on June 8th, the external auditors say the council's own estimate puts the cost of the rescue plan at £156m," he explained.

"The auditors voice their concern the total may go as high as £200m. The council official press release issued on Tuesday (June 29th) says the package is £119m.

"Both sets of figures can't be right and it's a huge amount of taxpayers' money whichever way you look at it.

"The whole issue has been wrapped up in secrecy and, with conflicting information like this, it looks like the council's deliberately trying to confuse people.

"It's just not good enough. Luton's taxpayers are entitled to know what their money is being spent on and why, and they should be told the truth about the amounts involved."