Revealed: Wolverhampton council's debt mountain hits £600m

Borrowing at the cash-strapped authority has risen by almost £100m in the last two years, with interest repayments on the general fund alone now standing at more than £246,000 a week.

It comes as auditors Pwc outlined 'a number of concerns' over the authority's financial position in future years due to the possibility of further Government cuts.

The council's annual treasury management report shows borrowing stood at £600m in January this year. It dropped to £585.8m by the end of September.

Bosses have described the situation as 'business as usual' and say the amount of debt is well within manageable limits.

Since 2010 the council has seen £160m wiped from its budget. It expects to have to make a further £46m savings over the next three years, with 24m of that set to be made in 2016/17.

But the figure is likely to rise again with another round of spending cuts set to be announced in the local government settlement.

The city's financial chief Councillor Andrew Johnson said: "In effect it is business as usual. We have to stay within our prudential limits and need to be able to cover the amount that we borrow.

"At the moment we are well within our budget, so there is nothing that is of concern. Our level of borrowing is represented by the assets of the city."

Borrowing is funded through a combination of public and private sources, and can be used to fund or partly capital projects such as the new Interchange 10 development and the revamp of the Civic Centre.

Mr Johnson said the authority had brought in a strategy to use its own cash balances to finance capital expenditure in order to save on borrowing costs.

But Tory leader Councillor Wendy Thompson said she was concerned over the 'vast scale' of the debt. "The residents of Wolverhampton need to be able to look around and see they are getting value for money," she added.

"If we had a vibrant and flourishing city centre then people would be able to see where the money had gone.

"At the moment we're not getting that."

Meanwhile, in an audit of the council's finances Pwc said there were 'concerns' over the authority's medium term financial standing.

It said: "We identified that although the council had proper arrangements for challenging how it secures economy, efficiency and effectiveness and for securing financial resilience in the in the previous year we did identify a number of concerns and risks relating to the council's ability to continue to demonstrate financial resilience."

The report added that should the council's general fund balance - cash set aside for 'a rainy day' - drop any further, it would be in a 'very perilous position to deal with future shocks'.