Government steps in with emergency funding to help Luton Borough Council balance books

Communities Secretary Robert Jenrick made the announcement in the House of Commons yesterday (Wednesday), saying the pandemic was responsible in some cases, while "very poor management" was in others.

Four councils in England - Luton, Eastbourne, Bexley and Peterborough - are being given the emergency funding by the government as they struggle to balance their books, with Luton set to receive a further £14m support funding for 2021/22.

Labour council leader Hazel Simmons welcomed the exceptional financial support being provided, "which recognises the catastrophic impact of Covid-19" on London Luton Airport.

Several local authorities have warned they face financial ruin because of pressures from the pandemic.

Luton was forced to approve an emergency budget last summer to identify more than £22m savings.

“The government’s directive will allow the council to borrow up to £35m to fund services this year," explained councillor Simmons in a statement.

"This isn't normally permitted because of the statutory requirement to set a balanced annual budget.

“Crucially it will ensure the borough council has a balanced budget.

"We can continue to deliver a successful recovery from the pandemic and our 2020-40 vision for a place to thrive without a dividend from our airport company.

"And that's without having to consider more devastating cuts to London Luton Airport Limited's (LLAL) community funding programme or our services.

“We greatly appreciate that the government has seen Luton as a special case for support," added councillor Simmons.

"It's similar to that which has been provided elsewhere in the aviation sector, including for easyJet, British Airways and Heathrow, which has been our position all along.

“This is positive news for Luton. 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 council.

"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.

"Even without a dividend, Luton’s ownership of the airport will continue to provide £22m income for services next year."

Luton along with Peterborough, Eastbourne and Bexley are getting the emergency funding, which comes as the government announces an extra £2.3bn of funding for local councils' core spending by next year.

LBC has received government Covid funding of up to £19.6m so far, according to its service director, finance, revenues and benefits Dev Gopal.

"There's an extra £6.5m for 2021/22," he told a scrutiny finance review group meeting, last night. (Weds 10th)

"Lately because of the extension of the lockdown we're experiencing more pressures, such as loss of parking charges and traded income," he said.

As with commercial income, the council receives no Covid grant funding for its traded business services, he explained.

Other funding sources include reserves, fees and charges, business rates and council tax.

"All these sources of money have to be tracked and monitored," he added.

"At this stage I don't have a final figure because those are quite a moving feast.

"And we've to take into account the capital programme of around £70m which was postponed, and then there's the extra support provided to LLAL.

"So it might be difficult if we're not tracking all these pots of money," he warned.

"We might end up with a bottom line figure which might not necessarily give a true picture.

"What element of money is one-off? What's ongoing? What other pressures will we have?

"In terms of the emergency budget savings from July, there's good progress being made on those."