William Eichler 01 July 2019

Birmingham City Council and Amey reach £300m deal

Birmingham City Council and Amey reach £300m deal image

Birmingham City Council has reached an agreement with Amey which will allow the outsourcing company to buy its way out of its highways contract for £300m.

The agreement comes after years of difficulties over the 25-year Birmingham Highways PFI contract, which included a five-year legal case in the Appeal Court over the £2.7bn deal.

The judge ruled in the city council’s favour and said that Amey had applied an 'ingenious new interpretation of the contract' to avoid certain repairs.

In April, Birmingham City Council also fined Amey £48.5m after the contractor failed to replace two damaged sets of roadside bollards.

Under the new agreement, Amey, which is owned by the Spanish infrastructure giant Ferrovial, will pay £215m in cash to extricate itself from the deal. £160 of this will be paid in 2019.

A further £55m will be payable over a six-year period.

A joint statement from Birmingham City Council and Amey plc 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,’ they added.

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