Last week we told you of the temper tantrum by the Labour Group when the democratic process got in the way of their maniacal airport expansion plans, and their attempts to get a £60 million loan for London Luton Airport Ltd voted on in private and not the public domain. It needs the loan to service its Himalayan sized debt mountain, which is all for the good of the town and its residents of course.
Having made a faux pass at the Scrutiny Finance Review Group on 6th August when the two Labour members had to declare a vested interest as LLAL Board members as does the single Conservative member. This allowed the ethical Liberal Democrats on this Committee to vote out the initial £60 million of a total of £102.3 million, a loan that is required to keep LLAL solvent and pay for the current essential airport projects. The Liberal Democrat group believe pouring good money after bad is not in the best interest of a town struggling even before Covid-19 coughed into town. A town who’s most vulnerable and needy citizens now are facing massive service cuts as COVID impacts together with the Councils desire to financially support LLAL.
When this Committee met again on the 27th August, the Labour group were not going to let the same mistake happen. Whilst the sole Conservative member declared and stood aside as before, the Labour group fielded two substitutes for their LLAL Board members with voting rights. This gave the Committee a 5-3 Labour-Lib Dem majority, and of course they voted the loan through to the Executive Committee on 14th September, and that it should be decided in private. As the Executive is solely Labour Councillors, the loan is no doubt being arranged as we type as it will never be refused.
A Council spokesperson was reported as saying that the loans are required so that LLAL can continue to provide vital funding to the town in the short term, whilst the airport passenger figures recover post Covid-19. LLAL has already stated that for the next two years it will not be able to meet its financial obligations to LBC.
Does this loan now mean that it will meet its obligations? Though surely borrowing money with an interest premium is only viable if LLAL’s only form of income, airport passengers, can reach levels to pay it back? In 2019 the Concession Fee per passenger received by LLAL was £2.97. To repay just this £60 million loan, no interest, would need a passenger throughput of 20.2 million passengers.
Current passenger limits at Luton Airport is 18 million per annum, a figure reached in 2019.There is a planning application in to ignore the binding planning limits to increase throughput by 1 million, no doubt this will be waived through when it reaches the Development Control Committee, as all airport proposals are. Add to that equation the widely publicised ambition of Wizz Air, the carrier that provides approximately 45% of throughput at the airport, to start a new base at Gatwick from November this year, with the real possibility this could lead to the transfer of a considerable number, if not all, of the current routes there as more Gatwick slots become available and that airport offers a more favourable commercial deal.
We now have the Doomsday Scenario in that instance of LLAL needing a passenger throughput of circa 28 million passengers just to pay off this £60 million. These current loans, and the others planned for next year, will sit on top of the current external borrowing requirements, i.e. debts, of LBC/LLAL which at March 2020 stood at £526 million.
In Part I we quoted Councillor Malcolm, Labour Finance Portfolio Holder and Chair of the LLAL Board, questioning the ethics of the Lib Dem group, and calling them “financially illiterate”.
Reading the mind boggling figures involved in chasing his flawed plans, we think the residents of Luton will have their own ideas as to who is “financially illiterate”, and it’s not the Liberal Democrat group?
Stop Luton Airport Expansion