Councils to lose millions from airport

Greater Manchester councils stand to lose more than £110m from Manchester Airport amid the worldwide coronavirus lockdown which has seen borders closed and flights grounded.

Manchester Airport has seen a massive reduction in passengers since travel restrictions were put in place around the world in March.

The airport is still operating essential flights but has closed terminals two and three, with all departures and arrivals taking place at terminal one.

Its economic woes will have a huge knock-on effect on Greater Manchester’s town halls, which rely on the airport for an annual cash boost.

Together the ten councils own two-thirds of the Manchester Airports Group (MAG) and receive an annual dividend worth millions.

However Manchester’s leader, Sir Richard Leese, confirmed that they can be ‘absolutely certain’ that they won’t receive the dividend this year amid the crisis.

And chiefs fear that the airport group will be ‘unwilling’ to pay its dividend in future years until trading recovers.

It will further intensify the huge financial pressure on councils which were already struggling before the pandemic hit, and are now having to spend millions more to support services and care workers dealing with Covid-19.

Manchester council especially stand to lose out as it has the largest individual share of all the local authorities – 35.5pc .

The other nine Greater Manchester councils which collectively hold a 29pc stake stand to miss out a smaller, but still significant amount of cash.

Tameside council was budgeting for an additional £6.4m from the airport, with £4m of that to be used to fund services this year.

“The dramatic reduction in passenger numbers and flights caused by international and national travel bans mean that it is highly likely that the Airport Group will be unwilling to pay its dividend for 2020/21 and a number of future years until trading recovers,” a report presented to cabinet this week states.

In its medium term financial strategy, Manchester city council was predicting to receive £61.99m in dividend payments for the year 2020/21.

Of this, £14.91m was to be used to support this year’s budget and the remainder was to be placed in a reserve to support next year. 

Officers had already recognised that it was ‘not a guaranteed income stream’ and may reduce or increase in future years.

But the scale of the lost funding will only intensify the threat of further sweeping cuts if councils don’t get financial support from central government.

Speaking at the weekly mayoral briefing, Sir Richard said they were estimating that coronavirus would see the region’s councils lose £541m in total in lost income.

“Councils in Greater Manchester and councils across the country have increasingly in response to austerity had to raise money in other ways in order to be able to provide crucial services,” he said.

“So councils up and down the country are raising commercial income in order to fill the gaps left by government cuts. 

“And GM is in exactly that position.

"The £541m includes extra money that councils having to spend, money they’re losing in fees and charges and also the money that they are losing in terms of commercial income, which includes the airport dividend.

“I think you can be absolutely certain that there will not be an airport dividend this year. 

“Unless we’re compensated by the government, the impact of that would be very significant cuts in key services.

“It would be devastating for councils across GM if we don’t get adequate compensation from government for that loss of income.”

---

Do you have a story for us? Want to tell us about something going on in and around Oldham? Let us know by emailing news@oldham-chronicle.co.uk , calling our Oldham-based newsroom on 0161 633 2121 , tweeting us @oldhamchronicle or messaging us through our Facebook page. All contact will be treated in confidence.