Luton Council budget report 'an appalling read' as position goes from 'bad to potentially catastrophic'

A policy change is needed over the local authority’s finances in Luton as its 2023/24 budget drifts “from a bad to a potentially catastrophic position”, a councillor has warned.

A forecast net overspend for the year of £2.6m and a gross core services deficit of £11.5m is being reported at the end of the third quarter’s monitoring during the last financial year, according to a report to the borough council’s scrutiny finance review group.

This deficit is before the allocation of general contingencies and corporate items, said the report.

LBC’s chief accountant John Chance explained: “There’s an overall pressure of £11.5m emerging from services, mitigated down to £2.6m after corporate and contingency activities we’ve identified.

“This is a worsened position from quarter two. With that £2.6m, if it’s delivered as we expect, there’s an impact on the council’s reserves.

“We’ve refreshed figures accordingly to get as much information in here as we can. As we emerge at the end of the financial year, we’re likely to see this pressure. It’s quite an impact that we’re finding at quarter three.

“It’s demand driven much of the pressures we’re seeing, both in housing and social care, whether it’s adults or children’s. It’s the throughput of clients the authority is dealing with that puts pressure on the finite resources we were set as budgets.”

Liberal Democrat Stopsley councillor David Wynn described himself as “horrified how much our position as a council has deteriorated between quarter two and quarter three”.

Labelling the report “an appalling read”, he said: “Cost recovery, being brutal, hasn’t been working. I can only envisage quarter four will look worse than quarter three.

“Why aren’t we stopping some of the expenditure we’d planned and cutting back on the capital projects spend?” he asked. “I’ve no faith going forward based on how much the finances have deteriorated during the last three months.”

Mr Chance acknowledged: “It’s a tough one. It’s the demand drive of new entrants into the system, which is fuelling the extra costs. It’s difficult to predict that at whatever level you’re working.

“The budget we’ve set for 2024/25 was based on quarter two and some extra information, so we’ve pump primed it in readiness to control some of the pressure we’re under.

“We must continue to deliver the deficit recovery plans and the savings from transformation. The budget has got demand driven increases in it. The government settlements aren’t always favourable for us as a unitary authority.

Councillor Wynn added: “From what I see here, we’ve gone from a bad position to a potentially catastrophic one. If we don’t start doing something different now we’re going to be in a giant mess as a council, despite all the hard work which has been done.”

He suggested recommending to LBC’s executive “a formal and detailed review of all projected capital and revenue spend, to proceed in a more orderly fashion towards a balanced budget in the next financial year”.

But his proposal was defeated in a vote, and councillors recommended the report for LBC’s executive to consider today (April 2).