Luton Airport’s ‘catastrophic’ drop in revenue forces borough council to set emergency budget

Luton Airport suffered a catastrophic drop in passenger numbers due to the coronavirus pandemic. Pic

Luton Airport suffered a catastrophic drop in passenger numbers due to the coronavirus pandemic. Picture: Luton Airport - Credit: Archant

The “catastrophic impact” of COVID-19 on passenger numbers has left Luton Airport’s parent company unable to pay its regular dividends to Luton Borough Council.

London Luton Airport Ltd (LLAL) provides the council with funding which is heavily relied on for many vital, front-line services.

The council has now compiled an emergency budget, after a thorough review of their finances uncovered a £22.2m budget gap, which is prompting 365 job losses and cuts to services.

Finance and audit services director Dev Gopal previously told the council’s scrutiny finance review group that the total COVID-19 impact is in the region of £70m.

A LLAL stabilisation plan accounts for in the region of £31m, with government support so far around £11.2m and a further £6.3m anticipated to cover lost income during the coronavirus crisis.

Presenting the emergency budget to a full council meeting on Tuesday, July 14, Labour High Town Cllr Andy Malcolm said: “In Luton, we receive more from trading and investments, including the airport, than we do from council tax.

“The coronavirus crisis has broken our defences against austerity. With flights virtually at a standstill, our airport company won’t be in a position to pay dividends this year or next year.

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“The government hasn’t provided sufficient support, despite our repeated requests since March and the 10,000 strong petition signed by the people of Luton.

“We have suffered a dramatic loss of income, yet we still have a legal obligation to balance our budget. Local government cannot borrow and spend to get through a crisis.”

As a result of the losses, the council is no longer able to run its own school meals service, which will be transferred to individual schools and private companies, and is reducing spending on public health by £1m this year and £500,000 next year.

The Ministry for Housing, Communities and Local Government (MHCLG) said the £11.26m emergency funding the council has received already is enough to cover coronavirus-related spending, which means the council is not bankrupt.

The budget was approved, with Labour and Conservatives in favour and Lib Dems against the rescue package.