£300m settlement close to ending highways contract dispute

The roadblock caused by the breakdown in the relationship between Birmingham City Council and Amey over the £2.7bn, 25-year highways contract could soon be cleared.

A £300m settlement, that would include £130m cash paid to the council immediately followed by further staged payments, is close to being agreed.

Both sides have acknowledged the progress made in talks to reach a settlement, although did not confirm the details of the proposed agreement.

The PFI contract handed over the maintenance of 2,500km of roads, 4,200km of footways, 95,000 street lights, 76,000 street trees, around 1,100 traffic light signals and more than 1,000 bridges, tunnels and highways structures.

A Birmingham City Council spokesperson said: “It is now generally accepted by all parties to the contract that in order to move forward Amey must be replaced with a new subcontractor.

“This will require a managed release and handover to a new provider along with an appropriate settlement to rectify the liabilities Amey proposes to leave behind.

“While the terms of this settlement are yet to be agreed and would be subject to further agreement by the council’s Cabinet, talks in recent days have established how an acceptable settlement could be reached and we will continue to work with all those involved to achieve an acceptable solution.”

The contract began in 2010 and was split into a five-year core investment period before entering an operational phase.

But the parties have been in dispute since 2014, with penalties and deductions escalating, and prolonged legal action resulting in an adversarial relationship.

An Amey spokesperson said: “We are encouraged by recent progress and appear to be arriving at a deliverable solution guaranteed by Amey. The next few days are critical to finally concluding this issue.”

Amey has previously said more than £350m was invested in the city’s highways in the first five years.