Birmingham sees debt level hit £26m
The huge debt racked up by Birmingham City Council has jumped by nearly a third during the summer to hit £26 million, it has emerged. But the true position is likely to be far worse, with officials admitting they are struggling to deliver promised efficiency savings.
With as much as £12m in savings from a business transformation programme at substantial risk of not being achieved, the council could end the financial year almost £40m in the red if emergency measures are not taken to rein in spending.
The sudden deterioration comes as the finance scrutiny committee said it was writing formally to council leader Mike Whitby and his deputy Paul Tilsley expressing “extreme concern” about the amount of money the council is borrowing to deliver major projects – which stands at a record £2.4bn.
The council said its overspend was £19.7m at the end of May but, by July, this had risen to £26m.
Councillors fear cuts in public expenditure over the next few years will result in a sharp reduction in the amount of grant money Birmingham receives from the Government, making it even more difficult to repay debt unless services are cut or council tax bills rise steeply.
Director of corporate finance Jon Warlow said he and his colleagues were putting an “unprecedented level of work” into finding ways of producing efficiency savings and of reducing spending.
