Every year the council must decide on what it considers to be a prudent policy for providing for the repayment of its debt (its Minimum Revenue Provision).
After a full review, a revised policy will be considered by the cabinet on 1 September, and if supported, will be recommended to the city council on 16 September.
This would re-phase the timing of providing for the repayment of much of the council's capital debt liability, with an effect similar to re-mortgaging a loan over a longer period. The revised policy also includes the ability to defer making a provision, if necessary, to help fund equal pay settlements if there was a delay in planned capital receipts being received.
Councillor Ian Ward, Deputy Leader of Birmingham City Council, said:
“The council has always taken a very prudent and cautious approach on providing for the repayment of its debt. The new policy is still considered prudent and reasonable but is more affordable. If it is approved by the council, we will incorporate the revenue savings into our financial planning. Clearly these savings are considerable, estimated to peak next year at around £58 million.
“However, the council continues to face huge government grant reductions and rising costs in key services such as Children’s Services. The MRP savings will only help us deal with these ongoing impacts and provide funding to assist with the implementation of the necessary actions. They will not remove the need for significant cuts over the next three years.
“The fact is that the council will still need to get its expenditure down to a sustainable level, given the government funding cuts and service pressures it faces.”