Luton Council's 2022-23 budget is 'complex and challenging', reveals finance director

'Any reliance on Luton Rising dividend has been removed from the council budget'
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Budgeting for the next financial year has been "very complex and challenging" for Luton Borough Council, a meeting heard.

What seemed "a bonanza budget" for local authorities from government was less favourable given social care pressures, the council's scrutiny finance review group was told on Tuesday (February 1).

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"Covid, demographic changes, inflation and uncertainty on sales, fees and charges" have been key issues, according to LBC director finance, revenues and benefits Dev Gopal

Luton Council's budget is complexLuton Council's budget is complex
Luton Council's budget is complex

“The medium-term financial plan is by and large in line with our forecast, but Covid and the latest inflationary pressures obviously have to be built in and taken into account," he warned.

“Currently we’ve a deficit of £0.7m as of the quarter two figures. We’re working on quarter three. And, based on those figures, the forecast is to have a balanced budget for 2021/22.

"The budget for 2022/23 has been very complex and challenging, mainly because of the uncertain environment. The final (government) settlement has been just for one year.

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"We’ve still got the stabilisation plan for Luton Rising which is something we’re still keeping a close look at.

"There’s no extra money from central government to cover the impact from Covid for 2022/23, but still the pressures will be with us for some time.

"The spending review hasn’t been favourable," said Mr Gopal. "The first impression was that it’s a bonanza budget.

"When you take into account the extra costs of adult social care precept, at just one per cent, we budgeted for three per cent, then it hasn’t been a favourable settlement for local government.

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"There has been extra funding towards the NHS and schools, but there’s still social care pressures and housing in local government.

"Hopefully the (future funding) White Paper should address that. But unless local government is properly funded regarding social care it will remain a challenge."

Local authorities will have to wait for the extent of funding reform "especially the borough council, which has been quite badly hit over previous settlements", he explained.

The proposed Luton council tax increase is 1.99 per cent and a social care precept limit of only one per cent.

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"These are the recommendations which depend on full council approval, but that’s what the budget is based on.

"There are still challenges off the back of Covid with the recovery," added Mr Gopal.

"They include climate change, the care sector, the supply chain, inclusive growth governance, all the issues which are quite challenging for local government.

"Any reliance on Luton Rising dividend has been removed from the council budget to make sure it's more sustainable and resilient going forward."

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Future dividend income will only be used to fund the local authority's capital programme, subject to stabilising Luton Rising, according to a slide shown to the review group.

The council’s finances were inspected by the Chartered Institute for Public Finance and Accountancy (CIPFA) last year, after the local authority requested more funding support after the impact of the pandemic.

The government issued an exceptional financial support loan allowing the council to borrow up to £49m to fund services up until 2022, although it only drew down £15.8m.

Mr Gopal said: "We have to implement this (CIPFA) guidance by March/April."