Council 'wobbles' on £2.2bn highways PFI

The UK's largest PFI highways contract is on the brink of collapse after the local council decided to take "time out" to review the project.
The decision on Birmingham City Council's (BCC) £2.2bn, 25-year highways maintenance and management PFI contract, comes just three weeks before prequalification documents for the scheme are due in.
BCC told contractors at a bidders' conference last week that "other financial options" were to be reviewed with a decision expected on 12 October.
The announcement means that the council, now run by coalition between the Conservative Party and the Liberal Democrats (well known critics of PFI) is very unlikely to meet the October first stage shortlist deadline.
Opposition leaders say this will "blow the whole PFI scheme out of the water" as the council will fail to meet the milestones
required to hold on to the £379m of PFI credits already obtained from the Department for Transport last October.
The options now under council review are a joint venture partnership, raising finance through issuing bonds and in-house delivery through supported borrowing.
"PFI is the only way this scheme will go forward," said an insider. "Any other consideration is a waste of time. Research has already proved this. The council leader was due to tell the conference that PFI was the only option, but his script was changed."
Even more worrying is the confusion over whether the eight unnamed consortia interested in the scheme should stick to the 13 August deadline to hand in their prequalification documents.
A decision on this is expected from BCC within the next week and will be sent to bidders in writing.
"We are totally shocked by the decision," said one contractor. "We have been working since May getting our consortium together and filling in the prequal forms. We want some serious answers from the council before we decide
whether to incur the increasing costs of proceeding to the
next stage."
BCC chief highways engineer and the scheme's project director Neil Dancer said: "This decision is a blip, but I feel the April 2006 date for work to start is realistic. If the cabinet decide to go ahead with the PFI option we are only looking at a delay of
four months."
Councillor Len Gregory, deputy leader of the council's Conservative Group and cabinet member of transportation and street services, added: "It makes good business sense to go through the scheme with a fine tooth comb and make sure it provides value for money and the right services to the
community."