Luton council draws up emergency cuts to avoid bankruptcy
Poor Luton, however I fear the local government landscape is about to change radically over the next 5 years. Without major action the coronavirus will push many authorities over the edge and then what? National Government can borrow its way out of trouble, the NHS can overspend without the sanction of closure, why is local government treated so comparatively harshly when it underpins many of the services which are equally important to people’s quality of life? This article tells us:
Luton borough council is drawing up drastic cuts to services to avoid bankruptcy after after a coronavirus-related collapse in passenger numbers at Luton airport blew an estimated £49m hole in its budget.
The council described the impact of the projected drop in revenue from the airport as a “nightmare scenario”. As the owner of the airport, it was receiving a £20m annual dividend, which has helped it maintain local services despite £130m of funding cuts since 2010.
It has been forced to plan a July emergency budget that will cut £22m, or 16% of its annual spending. “The airport has held back the tide of austerity in Luton, but coronavirus has broken those defences,” said Andy Malcolm, the council’s cabinet member for finance. “We are now going to feel the full force of austerity in council services.”
Local authority leaders called for a long-term stability plan for councils after figures suggested that continuing income losses from coronavirus-related shortfalls in council tax, business rates and commercial investments would run into several billions over the next few months.
Estimates based on the latest monthly government survey of councils’ financial projections suggest that local authorities remain on course for a £9bn-£10bn net shortfall this year, as the extra costs of meeting Covid-19 pressures in areas such as social care and homelessness continue to mount.
But there is growing concern that even if cost pressures start to reduce as the lockdown eases, many councils will face long-term structural deficits as record job losses and a faltering economy reduce income from local taxes, rates and business investments.