City council criticises Government decision to cut funding for major highways PFI contract

Beleaguered Birmingham City Council faces the loss of a £2.7bn highways maintenance PFI contract after the Government stepped in to block its support funding.

The highways contract was due a £50m a year Government contribution for 12 years and the loss of this is understood to have made it impossible for the council to proceed.

Government-appointed commissioners have been running Birmingham since it issued a section 114 notice in October, effectively declaring bankruptcy.

A Birmingham spokesperson said: “The council has received formal confirmation from the Department of Transport that the Government will withdraw its existing funding commitment and thereby no longer allow for the continuation of the restructured highway maintenance and management services PFI and the award of the operating sub-contract relating to the same. 

“The council will now review the decision and the government’s rationale in detail and discuss how to proceed. Our priority remains continuity of service and ensuring the safety of our citizens and visitors across the network.”

In a message to residents, council leader John Cotton urged them to sign a petition demanding the reinstatement of the contract.

Cllr Cotton said: “Time is running out for Birmingham as we face a decade of transport chaos because of the Tory government’s betrayal of our city.

“The government is letting the clock run down on our long agreed highways deal worth £600m over the next 12 year meaning we won’t have the money to repair our roads, pavement and vital infrastructure.

“This will have an impact on every single resident whether you prefer to walk, drive, cycle or take a bus. Stop the Birmingham roads betrayal.”

Contractor Kier had been expected to be re-awarded the work, which it has been carrying out since 2020 after the council’s previous PFI deal with contractor Amey ended in a legal dispute.

Mark Smulian