Latest Public Sector News

08.07.19

Amey to pay Birmingham City Council £300m to exit 25-year highways maintenance contract

Outsourcing giant Amey has struck a deal with Birmingham City Council to pay the authority £300m to escape its troubled road maintenance deal which was worth £2.7bn.

The deal will see Amey pay the city council £215m to cut short the 25-year highways contract, and pay another £85m in disputed fees and fines.

Both parties said they had reached a consensual settlement agreement, with an interim replacement contractor to be in place no later than 1 April 2020.

READ MORE: Amey tables £300m offer to escape 25-year Birmingham City Council contract

This brings an end to a long-running saga which has seen the contractor attempt to buy itself out of the £2.7bn contract multiples times. The new deal now clears the way for owners Ferrovial to sell Amey, averting a possible Carillion-style collapse.

A legal dispute over the contract ended last year when the Court of Appeal ruled in favour of Birmingham City Council and said Amey had applied “an ingenious new interpretation of the contract” which had left roads and paths unrepaired.

The city council received an offer of £200m to break the contract in February, and after this was rejected Amey said the council was “holding its own road network hostage” as relations between the two totally broke down.

Now, in a joint statement, the two parties said Amey would continue to provide services until an interim replacement contractor is found, with the search beginning immediately.

The full rendering of the project to find a permanent replacement contractor will take place during 2020/21, and the statement said all parties “will be working closely in the coming months to ensure the smooth transition of services and staff.”

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