Birmingham City Council owes other councils more than £200m

A council owed other local authorities more than £200 million last year, the seventh highest total of any council in the UK, an investigation shows.

Birmingham City Council owed Derbyshire County Council alone £40m in the first quarter of 2019/20, while £25m was owed to the Greater Manchester Pension Fund, run by Tameside Council.

Birmingham owed £20m each to the West Midlands Combined Authority, Greater London Authority and Tower Hamlets Council plus smaller sums to more than 20 other local authorities.

The investigation was carried out by the Bureau of Investigative Journalism.

The bureau found information on individual loans taken out by the city council through a Freedom of Information Request, alongside similar requests to other local authorities.

Also included in the figures was an outstanding amount owed to Birmingham Children’s Trust, which provides children’s social care in the city, having become a trust owned by but independent to the city council in 2018.

The council also had outstanding amounts due to Salix Finance Ltd, which provides publicly-funded loans to public sector organisations, and InReach (Birmingham) Ltd, a company owned by the city council.

A comparison of councils’ total debts to other local authorities, taken from Ministry of Housing, Communities and Local Government data for the end of 2019, showed the city council was seventh highest in the UK.

Birmingham’s short-term debt to other local authorities at the end of December was £225m, down from more than £270m in the first quarter of 2019/20.

The council’s short-term debt in December was behind Thurrock Council, Lancashire County Council, Plymouth City Council, Croydon Council, Surrey County Council and Rotherham Council.

Birmingham has the largest population size of any UK local authority area at 1.1m based on the latest figures from the Office for National Statistics.

Cornwall Council, population 570,000, ended the year with a short-term debt of £165m and Manchester City Council, population 553,000, owed £150m.

The bureau’s investigation showed Thurrock Council owed £1bn to other councils at the end of the year, the largest short-term debt to other local authorities of any council.

The Bureau found Birmingham lent Thurrock £13.6m since 2016, although Birmingham City Council has previously stated all of this money has been paid back.

Councils are permitted to borrow from other local authorities as well as certain other sources such as the Public Works Loan Board – the largest source of borrowing for councils.

The bureau’s investigation found outstanding debt from council-to-council lending rose from £4.5bn in 2013-14 to £11.9bn by the end of 2018-19.

A Birmingham City Council spokesman said: “Loans between councils are commonplace as councils meet the strict lending criteria.

“Birmingham is both lending to and borrowing from other councils, primarily as part of its day-to-day cashflow management, and this activity is reported quarterly to the cabinet.

“These transactions and the reporting process are fully in accordance with our Treasury Management Strategy and policy, as approved by the council.”