Birmingham's new library may cost three times more than expected

Dec 17 2009 by Paul Dale, Birmingham Mail

BIRMINGHAM’S new city library could cost hard-pressed council tax payers a staggering £590 million, it emerged today.

The figure is three times the £193 million that the city council has been quoting for two years.

Local authority estimates show the true cost of the prestige project in Centenary Square has rocketed.

The figures were discussed secretly by the cabinet this week, with officials claiming details were commercially sensitive and should remain confidential. But following mounting anger among opposition Labour members and some backbench Tory councillors about the real cost of the library, council leaders agreed to a request by the Mail to publish part of the cabinet report.

The council will borrow £135 million, with interest repayments at £7.5 million a year for 40 years – making a total of £300 million.

But on top of that has to be added £15 million for repaying additional loans taken out by the council plus the £15 million cost of the library project team. The estimates assume that the final cost can be cut by raising £34 million in sponsorship and public subscriptions, although none of this has yet been identified. Failure to raise all of the sponsorship money would bring the final library bill to £412 million.

The council will set aside £3 million a year for maintaining the new building over 60 years, a total of £180 million – making a final sum of £592 million.

The scale of the financial commitment prompted Tory councillor Randal Brew to warn that the city is over-stretching itself by racking-up expensive interest repayments. Coun Brew (Con, Northfield), said he was concerned that the council was “storing up problems for the future” with the growing cost of repaying loans which would eat into money that should be spent on front line services.