My Lords, my hometown, Luton, has also taken a severe economic hit from Covid-19. This has resulted in a devastating projected shortfall of more than £49 million in Luton Borough Council’s finances this year. As a matter of fact, Luton is the second worst-hit town in England.
The leader and the chief executive of Luton Borough Council have written a letter to the Prime Minister regarding this, a copy of which was forwarded to me. The letter points out that part of the commercial income increase is income through Luton Borough Council’s ownership of London Luton Airport. Luton Borough Council has invested heavily over the last six years to enable the doubling of the size of the airport to 18 million passengers. Last year, the airport delivered to Her Majesty’s Treasury around £116 million in air passenger duty alone. Covid-19 is decimating, and will continue to decimate, passenger numbers, with the operator currently forecasting an annualised reduction of at least 66% in 2020-21. With passenger numbers catastrophically impacted, the council’s airport company, London Luton Airport Ltd, is no longer receiving air passenger income. That makes it impossible to pass on dividends to the council, which relies heavily on them to fund many vital front-line services.
That will mean an in-year revenue reduction for Luton Borough Council of around £40 million in 2020-21. Taking into account the forecasted reduction in business rates, council tax, rents and fees and charges, there will be a shortfall of working capital in the region of £50 million in 2020-21. This shortfall will have a devastating effect on delivering our much-needed statutory services that protect and support the residents of Luton. Luton Borough Council is therefore urgently seeking emergency revenue funding from the Government of £50 million for 2020-21 in addition to the welcome Covid-19 response funding. Will the Minister support with sympathy Luton’s application to bridge this financial gap as a special case?