New Birmingham library could cost council tax payers £590m
The true cost to council tax payers of Birmingham’s new civic library could top £590 million, the Birmingham Post has discovered.
Interest repayments on money borrowed to build the Centenary Square library and other extra costs, including maintaining the building, means that the final bill may be three times the “maximum” £193 million figure that the city council has been quoting for two years.
Financial estimates for the project were discussed behind closed doors by the council cabinet this week, with councillors and officials claiming the figures were commercially sensitive and should remain confidential for the time being.
However, 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 Post to publish part of the cabinet report.
The figures show that the council will borrow £135 million, with interest repayments at £7.5 million a year for 40 years – making a total of £300 million.
Adding on the remaining £48 million of the £193 million headline figure would bring the cost to £348 million.
But on top of that has to be added £15 million to repay additional loans taken out by the council between now and 2013, when the library is due to open, plus the £15 million cost of the project team appointed to drive the scheme forward – making a total of £378 million.
Finally, the estimates assume that the council will be able to offset the cost 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 is also making plans to set aside £3 million a year for annual maintenance on the new building over a 60-year period, a projected total of £180 million – making a grand total of £592 million.
Council leader Mike Whitby told the cabinet that “major and significant” savings to the cost of the library had been negotiated with contractors Carillion, who will be paid a fixed lump sum of £144.5 million to deliver the building by June 2013.
He said: “We have had very healthy negotiations with Carillion and have already made major savings in the headline price.”
In fact, the only savings so far agreed amount to £4.2 million off Carillion’s bill – a reduction in the £193 million headline figure of less than three per cent.
The scale of the long-term financial commitment for the library prompted Tory councillor Randal Brew to warn that the city might be overstretching itself by racking up expensive interest repayments.
