Birmingham City Council has played down concerns over its ability to cope with rising debt levels after the authority revealed it was £2bn in the red at the end of the last financial year.
The council’s finance scrutiny committee heard last week its rising debt level means the authority could pay £270m a year in repayments by 2013/14.
Birmingham’s debts have increased following the introduction to local government of the 2004 ‘prudential borrowing’ regime, which has been used to fund a city-wide social housing improvement programme, the new civic library and a major regeneration project around New Street Station.
Mike Leddy, a member of the authority’s scrutiny committee, described the debt level as ‘frightening’.
But senior sources at England’s largest authority – which hosted last week’s Local Government Group annual conference – said that while the debt level looked high, it was manageable.
One said: ‘Under the prudential borrowing regime, we’re required to show that we can cover our debts – and we can. There are numerous ways we could fund repayments and a strategy is in place.’
