Coronavirus: Luton Airport woes contribute to £49m council deficit

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image copyrightReuters
image captionCar parks at Luton Airport have been empty of vehicles as lockdown measures took hold

Plummeting passenger numbers at Luton Airport are contributing to a £49m shortfall at the council which owns it.

Luton Borough Council has projected a £37m drop in airport revenue amid a "catastrophic drop" in passengers.

Chief executive Robin Porter said further shortfalls in tax, rents, fees and charges would add to the figure.

The government has offered councils more than £3bn to deal with Covid-19, but it is unclear if lost commercial income will be reimbursed.

Luton Borough Council, which uses profits from the airport to fund local services, has written to government ministers asking for emergency funding.

Mr Porter said there was a risk the authority may need to issue a Section 114 notice banning all new spending.

The last council to take such measures was Northamptonshire County Council, when it ran out of cash in 2018.

Mr Porter said the £49m shortfall was down to an "increase in costs over and above the funding that we've been given by government" and a "substantial drop in commercial revenue".

image copyrightGetty Images
image captionLuton Borough Council is warning there will be a "noticeable impact" on services as a result of the coronavirus crisis

Financial pressure would have "a real and noticeable impact" on services as the authority was "exposed to very violent halts in revenue", he said.

Council leader Hazel Simmons said the authority had asked for £50m worth of emergency funding for the 2020/21 financial year.

Other authorities in the East of England have also predicted large falls in their income, including:

  • Peterborough City Council: Has predicted a 10% fall in revenues from council tax and business rates - a potential £16m loss of income. It has received additional government funding but faces "significant additional costs in order to support the most vulnerable"
  • Milton Keynes Council: Predicts a £37m hole in its budget amid "uncertainty about collecting revenue" including around £12m in car parking income

Secretary of State for Local Government Robert Jenrick has said he stands "shoulder to shoulder with local government".

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