Birmingham City Council’s political leadership has claimed the government is set to “pull the plug” on £600m of funding for a highways contract.
Kier and Canadian firm SNC-Lavalin were last year invited to tender for the city’s restructured highways PFI contract, covering capital works and maintenance along more than 2,500km of road and 5,000km of footway.
A previous deal with Amey, worth £2.7bn over 25 years, collapsed in 2019.
Birmingham’s political leadership has now said the revised contract “looks set to be scrapped” by chancellor Jeremy Hunt.
According to the council’s Labour group, under the current deal Birmingham was set to receive £600m over the next 12 years to upgrade roads, pavements and street lights.
In a statement, the political group claimed it was now “widely believed that the Treasury is set to pull the plug on the PFI deal by letting the clock run down on the appointment of a new subcontractor” before the February 2024 deadline.
It added: “If government funding is not continued, then a new contractor cannot be appointed, and the city will lose the benefit of approximately £600m of funding between now and 2035.”
The council’s leader John Cotton said: “If the Treasury pulls the plug on the PFI contract this will be a complete betrayal of Birmingham that would see our city lose out on £600m of funding between now and 2035.
“Time is running out and we need the government to take a decision in the next week or we risk transport chaos in our city. For the sake of everyone who lives, works or visits Birmingham, I urge the Treasury to honour the PFI contract.”
Birmingham’s cabinet member for transport Liz Clements commented: “If the Treasury abandons our PFI deal, this will have an impact on every single resident in Birmingham. Whether you prefer to walk, cycle, take the bus or drive, your ability to travel safely around our city will be hit.
“This decision would compromise our ability to complete the essential works required to ensure our residents are safe on the roads and footways. This would also be a blow to our ambitious Route to Zero programme, as we would not have the funds needed to maintain our walking, cycling and bus priority infrastructure.”
Kier was appointed as the maintenance contractor for the city’s highways on an interim basis in 2020, after the previous arrangement with Amey collapsed.
Amey was appointed in 2010 to a £2.7bn PFI contract over 25 years. But in 2019, it reached a reported £300m agreement with the council to exit the arrangement 14 years early.
Construction News has approached Kier, SNC-Lavalin and the Treasury for comment.
The government appointed commissioners to oversee Birmingham this month after the council announced in September that it was unable to balance its budget. The local authority is facing a liability for unresolved equal pay claims that could reach £760m.