"Luton remains one of the poorest towns in the country" says councillor as it faces lost income from Vauxhall closure
A decision by Vauxhall owner Stellantis to close its commercial vehicle plant in Luton, putting 1,100 jobs at risk, could impact the borough council’s income from business rates, a meeting heard.
The local authority’s 2025/26 budget includes substantial growth in adult social care spending, reflecting demand and cost pressures, according to a report to a budget full council meeting.
A challenging economic environment has resulted in increased demand for core council services, especially children’s and adults’ social care, special educational needs and disabilities (SEND) transport, supported living and homelessness, said the report.
“In 2025/26, the council faces a substantial deficit from 2024/25 along with the ongoing demand pressures for social care and homelessness.”
LBC has opted for a maximum increase to its share of council tax bills of 4.99 per cent for 2025/26. Amounts for Bedfordshire Police and the county fire and rescue service make up the final total.
Labour Northwell councillor Rob Roche warned the council: “We need to deliver essential services and invest in the future of the town, at a time when public finances are constrained.
“It’s set to be a year of challenges locally, nationally and internationally in 2025/26,” he explained. “The economy is affected by negatives, such as sluggish growth, the cost of living crisis, rising prices and consistently high interest rates.
“These factors have a huge impact on local government resources in general and the financial position of LBC in particular. The decision by Stellantis to close its commercial vehicle plant in Luton puts pressure on the local economy.
“The council can’t avoid allocating money to demand-led areas and it means there’s less funding available for other services. The 2025/26 budget has been balanced only by factoring in the £10.7m of transformation savings and deficit recovery plans.
“Delivery of these savings will be pivotal to maintaining a balanced and sustainable budget in the medium-term. A resilient council delivers savings plans and doesn’t rely on drawing down on its reserves,” added finance portfolio holder councillor Roche.
“LBC is fortunate not to be in a position of declaring virtual bankruptcy in the immediate future. This is going to become increasingly challenging.”
Liberal Democrat group leader and Barnfield councillor Amjid Ali said: “We’re told it’s a balanced budget, but we’re digging into reserves.
“They’ve been renamed quality reserves. It’s not a balanced budget. Our deficit is at an all time high. There’s no clear vision on how to reduce this ongoing deficit.
“Despite the £18.5m investment and a further £900,000 into adult social care, this local authority continues to go for the maximum council tax rise. I doubt better days are ahead with the current deficit.”
Conservative group leader and Poets councillor Aslam Khan referred to the Labour group being in power locally “on and off for 27 years”, saying: “The town hasn’t got in this situation overnight.
“It’s decades of ill-thought out policies and mismanagement. The regeneration was entirely in your hands to deliver those projects planned for years and you’ve failed to deliver.
“Luton remains one of the poorest towns in the country. We’ve seen how far apart your projections are from reality.”
Labour councillors backed the budget recommendations, with nearly all the Liberal Democrat and Conservative councillors abstaining.