Councils withheld £32m last year from underperforming PFI providers, according to new research published today.

Law firm Collyer Bristow found only 0.3% of annual payments to all PFI providers were held back, suggesting local authorities are paying for poor or undelivered services.

The research shows that Birmingham City Council accounted for nearly half this figure after it held back £14m following a long running dispute with Amey.

Catrin Rees, senior associate in Collyer Bristow’s Construction team, said: ‘Councils - and ultimately taxpayers - should not be paying for services if they are not being delivered by PFI contractors.

‘However, if local authorities feel that their providers may not be holding up their end of the agreement, then it’s obviously sensible to consider revisiting the original agreements and taking advice on whether there are grounds to reduce or withhold payments to get a better service for taxpayers.’