Luton's financial plight raised in House of Lords by Liberal Democrat peer

An emergency budget is being prepared by the borough council, which has written to the government asking for a £50m bailout.

The local authority has been dealt a double blow, with a predicted drop in business rates, rents, council tax and other income, as well as the impact on passenger flights into and out of Luton Airport.

Current estimates suggest an income loss of around £45m for London Luton Airport Limited (LLAL), the council’s company which owns the airport.

What Labour council leader Hazel Simmons described as “a nightmare scenario” facing the local authority has been mentioned in the House of Lords by Lord Qurban Hussain of Luton.

“My home town Luton has taken a severe economic hit from the Covid-19,” he said.

“This has resulted in a devastating projected shortfall of £49m in the council’s finances this year.

“As a matter of fact, Luton is the second worst hit town in England.”

Councillor Simmons has written to the Prime Minister about acquiring emergency revenue funding for the coming year, he told the House of Lords.

“During the last six years, the council has invested heavily to enable the doubling of the size of the airport to 18m passengers,” he explained.

“The airport delivered to the treasury about £116m in air passenger duty last year.

“Covid-19 is and will continue to decimate passenger numbers, with the operator currently forecasting an annualised reduction of at least two thirds in 2020/21.

“With passenger numbers catastrophically impacted, LLAL is no longer receiving air passenger income.

“This makes it impossible to pass on dividends to the council, which it relies so heavily on to fund many vital front line services,” he added.

“When taking the forecasted reduction in business rates, rents and fees, council tax and charges into account this will result in a shortfall of working capital in the region of £50m in 2020/21.

“This will have a devastating effect on delivering our much needed statutory services that protect and support the residents of Luton.

“My Lords, the council’s urgently seeking emergency revenue funding from the government of £50m for 2020/21 in addition to the welcome Covid-19 response funding.

“May I ask the Noble Lord, the minister, if he would support Luton’s application with sympathy in bridging this financial gap as a special case.”