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NcNulty warns Birmingham to leave highways PFI alone
17:03 27 Oct 2004
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Transport minister Tony McNulty has warned Birmingham City Council
(BCC) chief executive Lin Homer not to meddle with the council's
£2.2bn highways maintenance PFI or face having nearly
£400m of PFI credits withdrawn.
McNulty wrote to Homer last week, less than a month after CJ revealed BCC's plans to scale back its scheme (CJ 22 September). The transport minister said "any changes" to the proposed scheme will result in £379m of PFI credits being withdrawn from the scheme and given to other local authorities - a move that would put the brakes on the 25-year contract.
BCC had a council meeting last week to discuss ways to scale back the scheme to about 50% of the original investment each year, with the loss of £8m in PFI credits, in an attempt to take away the management of the contract from the private sector.
McNulty described this as "disappointing news". "The pro-ject review group approved the scheme in its entirety and the PFI credits awarded were for the approved project," he warned. "If Birmingham plans to look again at the scope of the project and alter it in any way, and if the council is no longer minded to pursue the previously endorsed project in its entirety, then the project can no longer be considered approved and the PFI credits can be deployed with other schemes."
Homer was unavailable to comment as CJ went to press.
McNulty's involvement can be seen as a political move as the PFI was created under BCC's Labour leadership before the Conservative/Liberal Democrat coalition came into power earlier this year and demanded a review of the scheme (CJ 21 July).
Since the news emerged that BCC was considering making changes to the scheme, the council has confidently maintained its PFI credits are not at risk. Adding to BCC's worries is the fact that some of the 20 bidders interested in the scheme are starting to get cold feet because of the rollercoaster of events surrounding the project.
"As a consortium we have invested money submitting prequals for the scheme," one bidder said. "With so much uncertainty, our interest in the project is cooling."
McNulty wrote to Homer last week, less than a month after CJ revealed BCC's plans to scale back its scheme (CJ 22 September). The transport minister said "any changes" to the proposed scheme will result in £379m of PFI credits being withdrawn from the scheme and given to other local authorities - a move that would put the brakes on the 25-year contract.
BCC had a council meeting last week to discuss ways to scale back the scheme to about 50% of the original investment each year, with the loss of £8m in PFI credits, in an attempt to take away the management of the contract from the private sector.
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McNulty described this as "disappointing news". "The pro-ject review group approved the scheme in its entirety and the PFI credits awarded were for the approved project," he warned. "If Birmingham plans to look again at the scope of the project and alter it in any way, and if the council is no longer minded to pursue the previously endorsed project in its entirety, then the project can no longer be considered approved and the PFI credits can be deployed with other schemes."
Homer was unavailable to comment as CJ went to press.
McNulty's involvement can be seen as a political move as the PFI was created under BCC's Labour leadership before the Conservative/Liberal Democrat coalition came into power earlier this year and demanded a review of the scheme (CJ 21 July).
Since the news emerged that BCC was considering making changes to the scheme, the council has confidently maintained its PFI credits are not at risk. Adding to BCC's worries is the fact that some of the 20 bidders interested in the scheme are starting to get cold feet because of the rollercoaster of events surrounding the project.
"As a consortium we have invested money submitting prequals for the scheme," one bidder said. "With so much uncertainty, our interest in the project is cooling."
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