Birmingham City Council forced to borrow more money for LG Arena revamp
RECORD debt levels at Birmingham City Council are about to get worse, after officials underestimated the cost of a major refurbishment project.
Cabinet members are being asked to approve further borrowing to bridge a £400,000 funding gap for the £28 million LG Arena at the NEC.
Earlier this month it emerged that council debt stands at £2.4 billion – equivalent to £2,000 for every man, woman and child in Birmingham.
The figure prompted the main scrutiny committee to write to council leader Mike Whitby urging him to trim borrowing in future.
A report by corporate finance director Jon Warlow points the blame for the LG Arena overspend partly at regional development agency Advantage West Midlands, where cost-cutting meant the organisation failed to deliver all of a £3 million grant it initially promised.
The report adds: “Due to the need to meet the cost of items that were not originally in scope but are now deemed essential or required for compliance, and in the light of a shortfall in the level of third party funding from AWM against the original plan, additional funding of up to £400,000 is now required to enable the scheme to be completed.”
Mr Warlow said attempts to cut the cost of delivering the LG Arena proved insufficient to bridge the gap. He added: “Significant value engineering has already taken place on this project, yet despite this the existing contingency is now fully exhausted by items originally out of scope.
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