Watch: Birmingham City Council has highest council debt in the country
Birmingham City Council reports an unprecedented debt, raising concerns on financial management and future plans.
This eye-watering amount of debt, totalling is £3.35bn is significant as it impacts everyday life in Birmingham. However, Birmingham is not the only region reporting debt of this large amount.
Across the country, councils added almost eight billion pounds to their combined debt of more than £120bn last year.
Now while, Birmingham has cut its total by four percent in the past year, but the figure still looms large.
Officials stress the cost of borrowing is built into financial plans. They point to a cash balance of more than two hundred million pounds, which brings the net debt down slightly. They say there is no risk of issuing another Section one fourteen notice purely because of debt.
The notice in 2023 – essentially declaring the council bankrupt – was caused instead by equal pay claims and a failed IT project.
The equal pay bill alone is set at three-quarters of a billion pounds, and has already led to a settlement for around six thousand staff.
Most of Birmingham's borrowing is tied up in housing. More than a billion is linked to the Housing Revenue Account. The rest sits in the General Fund. The council says it aims to reduce General Fund borrowing in coming years. But it admits more money will be borrowed to upgrade housing stock – arguing that investment is necessary and affordable.
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