The Department for Transport (DfT) approved the single-biggest allocation of PFI funding for any local highway authority, as it pledged to give Sheffield council the £674M in credits necessary to bring its 2,000km highway network up to standard.

Sheffield has collected the highway inventory data to make the case that its backlog of repairs justifies the investment. The DfT has pledged to give Birmingham City Council £588M for its 2,500km network.

The council will hold a bidders’ conference later this month, giving potential interested bidders the opportunity to learn more about the project’s scope. John Mothersole, the council’s chief executive, said soft market testing had revealed ‘great interest in the project’.

Ian Kirby, Sheffield’s technical work stream leader, was also ‘optimistic’ that firms could raise the necessary finance.

While contractors have struggled to raise the necessary finance for PFI deals in recent months, ‘we’ll be letting the contract in 2011, and there’ll be a very different economy then’. Sheffield is investing £6M in the procurement process, and will commit £9.6M in extra revenue spending to support the contract.

Kirby said a ‘fence-to-fence contract’ was proposed – including streetlighting, highway trees, street cleansing, landscape maintenance and winter service – to ‘minimise interface issues in having more than one contractor’. Council leader, Cllr Paul Scriven, commenting on the approval, said: ‘It is a lot of money, and the people of Sheffield can expect a great return. We now need to make sure that all residents’ concerns are listened to, in order to get the best result.’

The Liberal Democrat-run council wants community assemblies to determine the priorities of the PFI’s programme for maintaining or replacing items such as street furniture and highway trees, rather than these decisions being top-down.

The Isle of Wight and Hounslow councils, the other two highways PFI pathfinders, expect to submit their outline business cases to the DfT later this year.