Amey to pay £215m to escape troubled Birmingham roads contract

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Amey has finalised a deal to pay £215m to terminate its troubled Birmingham highways maintenance PFI contract.

Parent company Ferrovial said that the agreement will see £160m paid in 2019 and the remaining £55m over the next six years.

Amey will continue to provide services on an interim basis until 30 September 2019, and it said this period may be extended until 31 March 2020.

This agreement does not have an impact on the profit and loss account of Ferrovial, the company added.

A joint statement from Birmingham City Council and Amey said: “A consensual settlement agreement has been signed for Amey plc to exit the Birmingham Highways PFI contract.

“As part of the agreement, Amey will continue to provide services until a replacement contractor is found to deliver those services on an interim basis. That interim replacement will be sought as soon as possible, but will be in place no later than 1st April 2020. The full retendering of the project to find a permanent replacement contractor will take place during 2020/21.

“All parties will be working closely in the coming months to ensure the smooth transition of services and staff.”

The PFI contract handled 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.

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.

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