Birmingham City Council’s political leadership has claimed the government is prepared to “pull the plug” on £600m of funding for a motorway contract.
Kier and the Canadian firm SNC-Lavalin were last year invited to bid for the restructured PFI contract for the city’s highways, which covers real estate works and the maintenance of more than 2,500 km of road and 5,000 km of footpath.
An earlier deal with Amey, worth £2.7bn over 25 years, collapsed in 2019.
Birmingham’s political leadership has now said Chancellor Jeremy Hunt “looks set to scrap” the revised contract.
According to the council’s Labor group, under the current deal, Birmingham was due to receive £600m over the next 12 years to improve roads, pavements and lighting.
In a statement, the policy group said it was now “widely believed that the Treasury is prepared to pull the plug on the PFI deal by letting the clock run out on the appointment of a new subcontractor” before the February deadline of 2024.
He added: “If government funding is not maintained, a new contractor cannot be appointed and the city will lose approximately £600 million in profit between now and 2035.”
Council leader John Cotton said: “If the Treasury closes the PFI contract, it will be a complete betrayal of Birmingham which will see our city lose £600m of funding between now and 2035.
“Time is running out and we need the government to make a decision 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 honor the PFI contract.”
Liz Clements, cabinet member for transport for Birmingham, said: “If the Treasury abandons our agreement with PFI, this will have an impact on all Birmingham residents. Whether you prefer to walk, cycle, take the bus or driving, your ability to travel safely around our city will be affected.
“This decision would compromise our ability to complete the essential works needed to ensure our residents are safe on roads and footpaths. It would also be a blow to our ambitious Road to Zero program as we would not have the necessary funding to maintain our priority walking, cycling and bus infrastructure.”
Kier was appointed as the city’s road maintenance contractor on an interim basis in 2020, after the previous deal with Amey collapsed.
Amey was appointed in 2010 on a £2.7bn PFI contract over 25 years. But in 2019 one was reached reported a £300m deal with the council exit the agreement 14 years earlier.
Construction news Kier, SNC-Lavalin and the Treasury have been approached for comment.
The government appointed commissioners to oversee Birmingham this month after the council announced in September that it could not balance its budget. The local authority faces a liability for unresolved equal pay claims that could reach £760m.
