'Talks ongoing' whether Luton Borough Council receives government compensation over Covid-19 impact

With flights virtually at a standstill, the council’s airport company won’t be in a position to pay dividends this year or next year.

The council had a first quarter overspend of nearly £2.6m compared to an emergency budget savings programme of £22.2m, according to the council's service director of finance and audit Dev Gopal.

Mr Gopal told the council's finance scrutiny meeting that the three main pressure areas are children’s services at £1.3m, temporary accommodation at £1.4m, and infrastructure repairs and maintenance costs at nearly £1m.

“There’s an upside in the corporate, based on interest we are forecast to pay, which is £1.3m, so this brings us roughly to the £2.6m deficit,” he explained.

“In terms of loss of commercial income, which is our case of £16m in dividend, the government hasn’t given any indication whether it will be supportive.

But we’re in talks with the Ministry of Housing, Communities and Local Government (MHCLG).

“We’ve had four or five meetings already and we’re still working with them.

“So they’re treating the council, which relies on a significant amount of commercial income, as a special case.

“So where those conversations will lead we still have to wait and see,” he added.

“What happens in the next three to six months is very difficult to predict as we don’t know with Covid-19.”

Mr Gopal said when the budget was approved, the council built in around £6.3m it was anticipating to receive from central government.

“There has been quite significant support when you take into account the Covid-related costs.”

Labour Limbury councillor Rob Roche asked: “Do we expect to receive anything else from the government for ongoing Covid costs?”

Mr Gopal replied: “The total we will receive is about £13m and then there was extra protection in the region of £2m to £3m to cover sales, fees and charges.

“The government is acknowledging councils are under pressure.”

Councillor Roche said: “I’m glad to hear the conversation about the commercial income is still ongoing.”

Labour Round Green councillor Mark Rivers asked if extra lockdown measures were imposed and there were additional costs would it be covered by the government.

“The current situation is the government are compensating for extra cost only and we are going to have to show that added expenditure to them,” he said.

Mr Gopal added: “Yes, the government has recognised councils face significant pressures over costs, fees and charges.

“There’s still a shortfall of potentially between £1m and £2m excluding any commercial income.

“The £6m to £7m of council tax and business rate impact will be spread over three years, but that loss will be in this current year.

“And there was £1.6m for the track and trace system.”