Six years ago, Mike Whitby declared his outright opposition to the Birmingham highways PFI on the grounds that it would remove responsibility for road repairs from direct council control.
It was a strange thing for the then-leader of the council’s opposition Conservative group to say. After all, you would expect the Tories to be in favour of privatisation.
There again, Birmingham in 2003 was going through one of its Alice in Wonderland phases, where nothing was quite as it seemed.
The Labour-controlled council, under the leadership of Sir Albert Bore, was intent on pushing through the PFI – effectively privatising every road and pavement in Birmingham for 25 years. Bravely, he fought off opposition from many left-wing Labour councillors, arguing that the only way the city would ever be likely to secure enough money to put the roads in a decent state of repair was by inviting private sector bids.
Coun Whitby and the Conservatives were cast in the unlikely light of the party committed to keeping the city’s under-performing street services in the public sector, They were backed by Liberal Democrat councillors, who also opposed PFI “on principle”.
All of that changed in June 2004, when a Conservative-Liberal Democrat coalition took control of the council from Labour.
Those who had spoken so forcefully against PFI were now faced with either abandoning the project, or trying to make it work. They chose the latter course, announcing in September 2004 that the coalition would work with the Department for Transport to secure a PFI deal.
Mike Whitby, by now leader of the council, moved seamlessly from “principled” opponent to an outspoken supporter of PFI.
Eight original bidders have been whittled down to a winner – Amey, which is expected to take responsibility for improving and managing the roads in spring 2010.
The announcement also highlights the impotency of trade unions at Birmingham City Council.
Despite much huffing and puffing, with a claim by union leaders in 2004 that 98 per cent of roads staff would strike if the PFI went ahead, there has not been a hint of industrial action. As was the case with the council’s pay and grading review, monumental change will take place whatever the unions think about it.
About 300 workers will be transferred to Amey under the Tupe regulations, enabling them to keep the same pay and conditions for a limited period of time.
But with Amey under pressure to make a profit out of the contract, there is little doubt that the workforce will feel the wind of change before long.
No one is saying how much Amey expects to make from the deal – financial forecasts are bound by commercial confidentiality clauses.
But there is a clue in the £1.25 billion PFI credit coming Birmingham’s way – the new money to be spent on the city’s roads over 25 years, which works out to £50 million a year. Whether that will be enough to deliver all of the promised improvements, and give Amey a good return, remains to be seen.
Paul Dransfield, director of resources at the council, admitted that no one could be quite sure about the scale of the task ahead.
He said: “Amey are taking significant risks on the condition of the roads and maintaining those roads.”
As for Amey, they are just delighted to have landed the biggest PFI contract of its kind.
The PFI timeline
* Early 2001 Birmingham Highways PFI first become public. Discussions between the city council and Government ministers begin.
* July 2002: Delays in approval. Council leader Sir Albert Bore says unlikely to hit target date of August 2004 for launch of contract.
* November 2003 Tory opposition leader Mike Whitby vehemently opposes PFI scheme on principle because it removes responsibility for road repairs from direct council control. Trade Unions also opposed.
* December 2003 Opposition Liberal Democrats and Conservatives try to stop progress on the PFI at the city council meeting. They are told by legal chief Mirza Ahmad they have no power to intervene. Tory deputy leader Len Gregory says the project is moving with “indecent haste”.
* February 2004: Investment is now £2.2 billion over 25 years and Labour Cabinet vows to plough on despite concerted opposition from the Conservatives, Liberal Democrats and many of their own left wing back benchers.
* April 2004: Trade unions say 98 per cent of road staff support strike action if PFI goes ahead. Target date for contract now April 2006.
* June 2004: Mike Whitby and John Hemming forge Conservative-Liberal Democrat coalition to run the city council, placing PFI in jeopardy.
* July 2004: Eight companies and consortia interested in bidding for the PFI contract attend conference at the ICC. Doubts expressed by companies wondering if council is committed to scheme.
* Sept 2004: Tory-Lib Dem coalition now in favour.
* May 2005: Four consortia shortlisted: Atkins/EDF Energy, Amey, Balfour Beatty/Mouchel Parkman Consortium and Birmingham Street Services (Vinci, Amec and Laing Roads Consortium).
* Oct 2005: Balfour Beatty/Mouchel Parkman withdraw. Amicus union threatens strike action.
* March 2006: Atkins/EDF Energy withdraw. Says project is too risky.
* May 2007: Unions accuse council of wasting £5 million on delayed scheme.
* March 2008: Final two bidders Amey and Birmingham Street Services begin to issue proposal details.
* Jan 2009: Decision delayed as Coun Gregory demands more financial guarantees from bidders.
* Aug 2009: Amey named as preferred bidder.