A government watchdog has raised questions about the justification for £29.5million of public funding proposed to support future housing development at the site where Luton Town Football Club’s new Power Court stadium is being built.
The assessment by the Subsidy Advice Unit (SAU) examines a subsidy proposed by Homes England for 2020 Developments (Luton) Limited, the property arm of Luton Town Football Club responsible for delivering the wider regeneration scheme at Power Court.
While the regulator cannot approve or block the funding, it has highlighted areas where Homes England’s assessment could be stronger before any final decision is made.
Homes England has proposed providing £29.5m through its Brownfield Infrastructure and Land programme to help unlock development at the long-vacant town centre site. The funding is intended to cover infrastructure and enabling works needed to make housing viable, rather than the construction of the football stadium itself.
According to the plans assessed by the watchdog, the infrastructure investment could unlock land capable of delivering at least 780 homes along with around 204,000 square feet of employment and commercial space within the wider regeneration scheme.
The subsidy has been referred for scrutiny because it exceeds £25m, meaning it qualifies as a “subsidy of particular interest” under the UK’s subsidy control regime. This requires an independent review before the public body involved decides whether to proceed.
In its report, the SAU said Homes England’s explanation of the “market failure” behind the funding – the argument that the development would not happen without public support – could have been clearer. The regulator also said the assessment could have provided stronger evidence to show the subsidy is proportionate and limited to the minimum needed to make the scheme viable.
The report additionally suggested the analysis of possible impacts on competition and investment elsewhere could have been more fully explained.
None of the observations mean the funding cannot go ahead. Instead, the watchdog’s role is to highlight areas where the public authority’s reasoning could be improved before a final decision is taken. Homes England must now consider the report before deciding whether to proceed with the subsidy or revise its plans.
The proposed funding relates primarily to infrastructure supporting the housing and commercial elements of the Power Court regeneration rather than the football stadium itself. However, the Hatters’ new ground forms a central part of the wider masterplan for the site.
Alongside the new ground, the approved development includes housing, commercial space and leisure uses as part of a major town centre regeneration project. Preparatory works for the stadium have already begun, including the diversion of the River Lea and the relocation of a nearby electricity substation.
The SAU report also outlines what could happen if the subsidy does not go ahead. It says the stadium project itself could still proceed, but the wider regeneration around it might change significantly.
According to the assessment, 2020 Developments (Luton) Limited could pivot to an alternative development plan for the land surrounding the ground at Power Court. Instead of the residential-led regeneration currently proposed, the report suggests that parts of the site could potentially be repurposed for lower-cost uses such as parking or retail.
That approach could allow the developer to recoup some of the investment already committed to the scheme, but would reduce the scale of housing and mixed-use development originally planned for the site.
The proposed subsidy from Homes England is therefore aimed at helping make the residential element of the scheme viable, rather than funding the stadium itself, which is expected to be financed by Luton Town Football Club.
The report nevertheless highlights how closely the housing and regeneration elements of the scheme are tied to the stadium project. Infrastructure funded through public subsidy is intended to help unlock development around the ground, which is expected to host its first football match in the 2028/29 season.
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