LBC Finances Under The Spotlight

Earlier this year, we reported how LBC had been granted access to a Capitalisation Direction Loan from Central Government, to help provide for budgets, due to the complete loss of income from the airport.

Now it is reported that as part of that review, The Chartered Institute of Public Finance and Accountancy, will undertake an external assurance review of the financial position and management of LBC and the seven other Local Authorities who accepted those loans.

CIPFA has been chosen to undertake these reviews, to provide detailed assessments of each of the seven councils’ financial positions, and how they managed any risks associated with their finances.  It will also assess the deliverability of savings plans and efficiency in delivering services, as well as recommend how the councils can improve if necessary.

The Local Government Minister is quoted as saying: “even with the considerable support already provided, there will be individual councils with unique circumstances which, in some cases, has been exacerbated by poor financial management on their part”.

“These reviews will ensure each council have plans in place so that they are financially sustainable, minimising the need for further government support and working in the interest of the communities they serve”.

The day after the report of the review, Slough Council filed a Section 114 notice, which basically means they cannot support their budgets. No new expenditure is permitted, except for statutory services; however, existing commitments and contracts will still be honoured.

Is that the reason that LBC have passed the new £140 million loan for its airport company? As an existing commitment, if and when it declares a Section 114, its pathological obsession on wasting money on chasing its 32 million airport fantasy will be safeguarded?

The CIPFA review will look into risk management, and we sincerely hope that they will see what ourselves and many others see: that all support for LBC’s airport company, has been/is/and always will be, a huge risk too far, and demand rather than recommend that this £140 million loan is withdrawn, and no support be given to LLAL going forward.

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