Birmingham roads PFI faces £20m a year cut

Birmingham's £2.2bn highways PFI is likely to be scaled back because Birmingham City Council (BCC) is concerned about handing over complete control to the private sector.
BCC's overview and scrutiny committee is considering eight financial options for future highways works, including the original 25-year PFI, after the newly appointed Conservative and Liberal Democrat coalition leadership decided to review the project (CJ 21 July) to test
its affordability.
A draft proposal of the council's preferred option will be reviewed by the committee on Friday with a final decision
made on 12 October by the
council's cabinet.
However, sources claim the council will "almost definitely" choose the option to trim down the PFI to what has been labelled a "mini PFI", resulting in an estimated 50% cut in capital spend from £40m to £20m per year.
The cut backs will mean the winning contractor will not have responsibility for highway tree placement, street cleaning, horticulture, traffic signals, winter maintenance, signage and benches, emergency response, event management, road markings and public place management. These will be run by
the council.
"The council's leadership is very edgy about PFI as a whole," one source said. "This approach offers a compromise where BCC takes control over the project, but will get the financial backing to do the works."
The downsizing of the contract could invalidate the council's outline business case and is likely to be reviewed and challenged by the Department for Transport, which could cause further delays to the contract. It was due to go live in 2006.
Contractor interest will also be affected and BCC has already admitted that changes to the project will lead to challenges from consortia who have submitted documentation based on the original specification.
One bidder said: "Some might see the changes as being a less attractive option as taking away the management role will cause huge problems with interfacing and could see the contract become a logistical nightmare.
"However, the fact that streetlighting won't be taken out of the package means it will still be appealing to some. If anything else is stripped out of the scheme, I think the council will struggle to get any interest."