£2.2bn Birmingham highways PFI halted over funding worries

Funding concerns have halted the long-delayed £2.2bn Birmingham City Council’s £2.2bn Highways PFI scheme.

The banking crisis has prompted the council to ask the two shortlisted bidders for further reassurances that they can fund the scheme.

Shortlisted bidders Amey and Birmingham Street Services (Vinci, and Laing Roads Consortium) were told of the delay just days before the preferred bidder was to be announced.

Birmingham City Council declined to say when the scheme would be back on track. A spokeswoman said: “The council has asked for reassurance that the bidders for the Highways PFI scheme have their funding in place in the light of the current banking crisis. One bidder has already responded and we are now waiting for the other bidder’s response.”

The scheme has been dogged by delays. In 2006 the newly elected conservative council shelved the scheme for some months. Further delays came last year as rising costs forced the council to go back to central goverment for additional funding last year.

This is the second major PFI scheme in Birmingham to derail at the final bend. The £1.2bn Birmingham Building Schools for the Future (BSF) scheme was also put on hold in December, the day before its preferred bidder was to be revealed. At the time the council said it was seeking clarifications on a “number of outstanding issues” with shortlisted bidders Catalyst Education (Bovis Lend Lease) and Land Securities Trillium.

A council spokesman confirmed today that both BSF bidders have been asked to provide further evidence of their ability to fund the scheme. The sale of Trillium to Telereal, announced this week, is also expected to delay the council’s decision on the preferred bidder.