Birmingham faces transport double-whammy that would ‘hold back the city for decades’

Date: 26 September 2023

Issue: Immediate

Contact: alistair.mcintosh@birmingham.gov.uk

Birmingham faces transport double-whammy that would ‘hold back the city for decades’

Political leaders in Birmingham today urged Chancellor Jeremy Hunt not to deliver a double whammy that will hit pedestrians, cyclists, motorists and rail passengers, holding back the city's economy and transport network for decades to come.

This comes as the both the city’s Highways Private Finance Initiative (PFI) contract, worth £50 million per year to the city, and the northern leg of HS2 look set to be scrapped by the Chancellor in the weeks ahead.

The PFI deal would see Birmingham receive £600 million over the next 12 years to upgrade and maintain the city’s roads, pavements and streetlights.

Despite the Council’s plans having the backing of the Department for Transport, it is now widely believed that the Treasury is set to pull the plug on the PFI deal by letting the clock run down on the appointment of a new sub-contractor before the February deadline.

Today, Birmingham’s Labour leadership have written to the Chancellor to urge him to honour the PFI deal or see the city’s road network “collapse into disrepair, causing immense economic harm to our city and blighting the lives of our 1.2 million citizens.”

The Leader of Birmingham City Council, Councillor John Cotton, said:

“For the Treasury to pull the plug on the PFI Contract would be nothing short of a betrayal of Birmingham and would see our city lose out on £600 million of funding between now and 2035. For the sake of everyone who lives, works, or visits Birmingham, I urge the Treasury to honour the PFI contract.

“Birmingham City Council has been engaged in careful negotiation with the Department for Transport over the PFI contract. At every step we have acted as good faith partners and have carried out an extensive procurement exercise.

“The cancellation of Phase 2 of HS2 would be a disaster for Birmingham, holding back our city for decades. We are seeing record levels of growth and investment, with the promise of the arrival of HS2 from London by the end of the decade. The northern phase would put us at the heart of a transformative network, linking us with Manchester and Leeds. For this to be scrapped would be a short-sighted decision that would be to the detriment of the nation’s economy and further question the government’s commitment to Levelling Up.”

Councillor Liz Clements, the Cabinet Member for Transport, said: “If the Treasury abandons our PFI deal then this will have an impact on every single resident in Birmingham. Whether you prefer to walk, cycle, take the bus or drive, your ability to travel safely around our city will be hit.

“This decision would compromise our ability to complete the essential works required to ensure our residents are safe on the roads. This would also be a blow to our ambitious Route to Zero programme, as we would not have the funds needed to maintain our cycle network, or give better priority to buses.

“I do not see how, as a nation, we can hope to meet our climate targets without the HS2 system being delivered in full. The Chancellor must reconsider this decision or risk our country’s green transition.”

Liam Byrne MP said: “After 13 years of Conservative rule our country’s infrastructure is crumbling. To add insult to injury and now cancel investment in our city’s roads and our country’s High Speed Rail is the very opposite of a long term decision. It’s a double disaster for Britain’s second city that simply imperils economic growth, jobs and wages.”

Notes to editor

Originally agreed in 2010, the PFI deal was set to last for 25 years, however issues with the original sub-contractor left the authority with no option but to terminate the contract in 2019. Birmingham Highways Limited has since been working to appoint a new sub-contractor to take on the PFI contract once again.

Text of letter sent to the Chancellor:

The Rt Hon Jeremy Hunt MP

Dear Chancellor,

We are writing to raise our concerns about matters which jeopardise Birmingham’s future prosperity.

Birmingham is attracting record levels of growth, the city has a young and talented population, and is set to play a vital role in the green industrial revolution. Integrated local and national transport links will be at the heart of this, allowing people and goods to move freely, creating prosperity and opportunity for communities across our city and beyond.

However, we face a dual threat to this in the form of the termination of the Birmingham Highways PFI contract and the cancellation of the northern phase of HS2.

The cancellation of the PFI contract would see the city lose £0.6 billion of funding over the coming 12 years, whilst scrapping HS2 would harm our city’s economy for decades to come. Together, these decisions would be disastrous for our city.

Birmingham City Council submitted the Full Business Case (FBC) relating to the Council’s Highways Maintenance and Management PFI Contract on 11 August 2023. In line with the agreed timetable, the Council’s Cabinet Committee approved the FBC on 5 September 2023.

The Council and Birmingham Highways Limited (BHL) have fully responded to all of the Government’s requirements, but it is with grave concern that the Council has still not received a formal response to the Outline Business Case, submitted 12 months ago, nor any feedback on the FBC.

It is absolutely critical that the Council receives approval to proceed from Government by 30 October 2023 so that the contract can commence on 1 February 2024.

Should the Treasury not approve the FBC, then the Council will incur significant costs, but more importantly the city of Birmingham will lose out on £50 million per year for the next 12 years.

This will have a significant impact on the ability of the Council to maintain the highways, pavements, bridges, streetlights and traffic signals of our city. If our contract were not honoured by the government then our road network would collapse into disrepair, causing immense economic harm to our city and blighting the lives of our 1.2 million citizens.

The Council’s Leader and Chief Executive wrote to the Rt Hon John Glen MP, copying in Bernadette Kelly, Cat Little and Sarah Healey on 13 September to request an urgent meeting, but have yet to receive a reply.

The threat to the city’s Highways PFI contract is now further compounded by the speculation that the Government is poised to cancel Phase 2 of HS2, meaning that the line would terminate in Birmingham.

HS2 is a once in a generation opportunity to deliver huge benefits to the north, the West Midlands and the country by connecting the UK’s biggest economic centres. Stopping HS2 at Birmingham would be a huge waste of investment and would not solve the existing capacity issues that are holding our country’s economic growth back.

A decision to scrap Phase 2 would be short-sighted and would leave the cities of the midlands and the north to stagnate, further exacerbating an already London-centric economy. The future prosperity of communities across Birmingham and the wider West Midlands is predicated on HS2 and the homes, jobs and opportunities that High Speed Rail will deliver.

The Prime Minister has this week re-iterated his commitment to Levelling Up, and we are clear that you cannot level up the UK without levelling-up Birmingham and the West Midlands. We therefore urge you to take action to honour the Birmingham Highways PFI contract, safeguarding the future of Birmingham’s highways network, and deliver HS2 in full.