After the unsurprising decision of the Labour-controlled Executive Committee of Luton Borough Council (LBC), to agree to the first of four loans, due this year and next to its airport company, London Luton Airport Ltd (LLAL), the Chair of LLAL Board and the Finance Portfolio holder Councillor Malcolm, took little time in blaming austerity cuts, and Covid-19 for having to make the loan. When he did his media interviews, he remarked that his “stewardship” of LLAL has always been in the best interests of the airport’s true owners, Luton residents.
Stewardship:- The conducting, supervising or management of something, especially the careful and responsible management of something entrusted to one’s care. It is therefore incumbent on that organisation/person to carefully manage those key resources in the most effective manner possible.
Councillor Malcolm assumed the stewardships of the LLAL Board and Portfolio Holder for Finance in 2015; let us review his figures from then until March 2019. The LLAL accounts for 2019/20 have yet to be filed.
Between March 2015 and March 2019, Government austerity cuts have removed £36.2 million from budgets. Concession Fee income from the airport operator has raised from £29.5 million to £49.9 million, pre-tax and deductions. The share dividend decided on by the LLAL Board for LBC has risen from £1.25 million to £20.1 million. It should be noted however that in 2015 LLAL purchased farmland for their Century Park/Terminal 2 expansion plans at a cost of £11.4 million. Therefore that dividend could well have been £12.65 million in real terms. Add to this the sums that LLAL have paid LBC for the use of their staff – two staff in 2015 cost £226,547. By 2019, for an unspecified number of staff, the figure was £1,555,026.
These figures would appear to show that under the stewardship of Councillor Malcolm, LLAL had done its bit in fighting the austerity cuts, but then you read the debits on his account.
As Chair of LLAL, in step with senior Councillor colleagues and LBC officers, Councillor Malcolm decided that LLAL would desert its seventeen-year role as the non-risk taking airport rent collector, to a full blown airport developer, backed by debenture loans to it from LBC. In 2015 these loans sat at £27.9 million, and in 2019 they were £137 million, out of a £281 million loan facility made available to LLAL. These loans have been invested in the DART project and the airport expansion Development Consent Order process.
Neither has net material value to the residents of Luton or to the airport in general. They are solely there to facilitate airport expansion to the preferred Terminal 2 site. The reasons for expansion have even less relevance now with the Covid pandemic, than it did at its time of publication, as it was based on if/what’s and maybe’s. A positive answer is also outside LLAL/LBC control as it is a Government decision.
These projects will consume their budgets, and the excess funding required, and realistically deliver no financial value to the town in relation to their size; this appears to be another of Councillor Malcolm’s cunning plans? This theory is that the interest gained on these loans, is a better financial return than to keep the repayments and interest by not actually undertaking the projects. The money LLAL pay off these loans with is from the Concession Fee, which is all LBC’s anyway.
It’s like mugging yourself, taking £20 pounds from your wallet, then giving yourself £15 back and thinking just losing £5 is a good result?
Can we also assume that the “spend millions now and get it back from the next concessionaire” plan is also a brainchild of Councillor Malcolm, as Chair of LLAL? This plan is to spend all the money we’ve mentioned, so that in 2031 when the current concession ends, all debts will be added to the upfront price, and a queue of airport operators will be clamouring to sign. The flaw of course is what happens when there isn’t a queue? LBC cannot operate the airport themselves as they would not be able to consume these debts, so they will be held to ransom by whichever institution makes them the best worst offer. T he debts of course will still need to be paid, so where will that money come from – yet more loans to live off the interest?
More collateral damage from this policy was the drop in charity donations from £13 million in 2015, to £9.2 million in 2019. Supporting local charities and those in poverty in Luton would appear to now be a secondary purpose behind replacing a perfectly adequate and free transit link, with a very expensive shiny new train? Unless of course you are still in poverty in 2040 when the end result of all this speculation is no poverty in Luton apparently?
In the accounts of LLAL, under the Principal Risks and Uncertainties heading, the single risk is listed as fluctuations in passenger throughput, the key determinant of the concession income fee. Covid-19 has made the risk a reality, not just now but for the foreseeable future, until an effective vaccine is produced assuming that actually happens. Aviation around the world is taking a long hard look at its finances to ensure it can be as future proof as possible within that very uncertain future.
Councillor Malcolm would appear to have taken the exact opposite path, spend and be damned; LLAL must not fail even if the town of Luton has to in its place, blame everyone and everything rather than your own flawed and lazy thought process. His philosophy may well be why is it worth shutting the stable door after the horse has bolted; choosing to ignore it was he who took the stable door off its hinges in the first place?
Stewardship:- The conducting, supervising or management of something, especially the careful and responsible management of something entrusted to one’s care. It is therefore incumbent on that organisation/person to carefully manage those key resources in the most effective manner possible.
Councillor Malcolm – good steward or bad steward, you decide?
Stop Luton Airport Expansion