Birmingham Highways Infrastructure Private Finance Initiative

(Limited Text - Ministerial Extracts only)

Tuesday 28th November 2023 Lords Chamber

[Lord Snape]

To ask His Majesty’s Government when they expect to conclude the review of the 2010 funding agreement for Birmingham City Council’s Highways Infrastructure Private Finance Initiative; and whether they intend to honour the agreement to continue funding the PFI until 2035.

[The Parliamentary Under-Secretary of State, Department for Transport (Lord Davies of Gower) (Con)]

My Lords, the Government are currently considering the business case for a revised contract for Birmingham highways maintenance following the failure of Birmingham’s original PFI deal. Highways maintenance is a critical and statutory function for all local authorities and the Government will continue to support them to fulfil this function. A decision is expected imminently.

[Lord Snape (Lab)]

My Lords, while I am grateful for the response and it reflects great credit on the Minister—I congratulate him on his new appointment—this matter has been dragging on for many years. The original contract was signed in 2010. The Department for Transport supported the city council in the removal of the contractor in 2019, but when will the Government approve the full business case and pay up the £50 million a year which they committed to do when the original contract was signed back in 2010?

[Lord Davies of Gower (Con)]

I thank the noble Lord for that supplementary. The Government recognise that the delay in reaching a decision is far from ideal and is causing challenges for the council. I am sure noble Lords will appreciate that this a big investment decision that needs to be looked at thoroughly. The Government want to make sure that they have looked at all options to support Birmingham City Council’s highways maintenance programme.

[Baroness Stuart of Edgbaston (CB)]

My Lords, as a former Birmingham MP for 20 years, I am familiar with the shortcomings of its pavements, potholes and other areas. I stress that if this contract is not renewed, Birmingham will be deprived of some £600 million over the next 12 years for essential repair work, which is important not just to keep the citizens of Birmingham safe but to allow the city to meet its obligations under moving towards net zero.

[Lord Davies of Gower (Con)]

I fully appreciate what the noble Baroness says. As I said, the Government recognise that the delay in reaching this decision is far from ideal. There are several issues around this and clarification has been needed on some aspects, but the Department for Transport money is ring-fenced, so we should be sound in that respect.

[Baroness Randerson (LD)]

My Lords, commissioners were appointed in Birmingham to restore good governance, and good governance usually includes timely decision-making. Does the Minister accept that by leaving this so late, this is poor decision-making that undermines, for instance, initiatives associated with active travel and zero emissions that are necessary to take Birmingham forward in a modern manner?

[Lord Davies of Gower (Con)]

I totally agree with the noble Baroness that it is not ideal—I said that earlier. As I said, this has been bogged down with issues between the contractor and Birmingham City Council. The Government have worked to come up with a solution. That will be announced imminently and, hopefully, we will be able to get under way with a new contract.

[Lord Hunt of Kings Heath (Lab)]

My Lords, with respect, where it has been bogged down is in His Majesty’s Treasury, and it should be a Treasury Minister before us today answering why it is putting in such delay. Does “imminently” mean by the end of November? The Minister will be aware that unless a decision is made by the end of November, the whole thing falls down and the city council is immediately liable for the costs of those who tendered and then the re-tendering process. Can he say that there will be a decision within three days?

[Lord Davies of Gower (Con)]

I can say that “imminently” is as meant in the English dictionary, which means probably about to happen.

[Lord Liddle (Lab)]

Will the Minister urge the Treasury to give some thought to the bigger picture on this question? Here we have Birmingham, one of the largest cities in the country and the centre of a region that is prospering as a result of investment, some of which owes its success to the HS2 decision. It has an activist mayor. We on this side may disagree with his politics, but he has certainly managed to put Birmingham on the map. It is a city region on the verge of first-world rank and status. How would it make any sense for the Treasury to consign the highways of Birmingham city to third-world circumstances?

[Lord Davies of Gower (Con)]

I do not necessarily agree with the latter part of the noble Lord’s comments, but on the first part, I will take his message back to the Treasury.