Birmingham City Council's leader has accused the Government of 'betrayal' by axing the authority's £2.7bn highways Private Finance Initiative (PFI) contract, in a move that could lose the authority more than £500m of roads investment.

A council spokesperson told Highways that ministers have withdrawn their £50m a year contribution for the PFI contract, which would have run from 2024-2035, causing the deal to collapse.

Under the original arrangement - only confirmed last month - Birmingham would have put in £50m annually and the Government a further £50m.

The Government has now told Birmingham that it will only provide its share until the end of the current Spending Review period (2024/25), Highways understands.

This is expected to be delivered through an uplift to the West Midland Combined Authority city region sustainable transport settlement.

After that period, the council could fall back on an interim arrangement with Kier, under which the authority maintains its own £50m annual investment but receives none of the Government's support.

Birmingham City Council leader John Cotton said: 'The Government has betrayed Birmingham to the tune of over £500m.

'This will have a negative impact on every single person in our city. This is a disgraceful decision that comes at the end of four years of careful negotiation and work from the council and our partners and shows the government’s contempt for Birmingham.

'We will continue to fight for the funding that is rightfully ours. More than ever, we need a Labour mayor to stand up for our region, and a Labour Government that will keep its word to local authorities.'

The Department for Transport has been approached for comment.

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