was giving the go ahead for £2bn private investment to be made
available to the Birmingham Highway Management Service scheme. The
Department for Transport will support this scheme by providing
The new money will be used to improve the condition of Birmingham's
2,488 kilometres of road network. The scheme also proposes an
improvement in the current street lighting service that will involve
the total replacement of the city's 85,000 street lighting columns
over the course of the 25 year contract with 58,000 of the oldest
lighting columns being replaced within the first five years.
Additional lighting columns will also be installed to increase the
city's lighting stock to 119,000 improving lighting standards. The
improved highways and better and brighter street lighting will
benefit all users helping to improve road safety and a reduction in
crime and the fear of crime.
Mr McNulty said:
'This is good news for Birmingham. The highway management scheme
announced today means better and safer roads for drivers and
'I am very pleased that local authorities are using the private
finance initiative as a means of re-thinking services for their local
community. Partnerships like this are providing investments for
much-needed improvements in our local public services.
'A total of 247 projects across England have now been endorsed. These
projects, through the private finance initiative, are bringing real
improvements to the quality of life in local communities.'
Local Authority PFI
1. This is the second local authority highway management scheme to have
been endorsed by the inter departmental project review group. In
addition, 12 local authority street lighting schemes have also been
endorsed. A full list of endorsed local government PFI schemes can be
located on the ODPM's website.
2. Local authorities work with local government's Public Private
Partnerships Programme (4ps) to submit projects to the sponsoring
government departments for consideration. Departments in turn present
the projects to the Project Review Group (PRG). The PRG is an
inter-departmental group chaired and administered by HM Treasury that
oversees the approval process for local authority projects requiring
PFI government support. Projects endorsed by the PRG become eligible
for revenue support as long as current proposals are translated into
contracts. Endorsements are given for the year in which the project
is expected to reach contract close and for a specified amount. If
these circumstances change a project may need to be re-appraised by
PRG. Further information on the Local Government PFI process can be
found on the ODPM's website
3. PFI support is made available to local authorities through PFI
credits, which represent a commitment on the part of the government
to provide a certain level of revenue support to an authority. The
revenue support acts as a contribution to the unitary charge that the
authority will be contractually committed to paying to their PFI
contractor. The PFI credits are converted into revenue support by
applying a 4% reducing balance and a fixed interest element. The
interest rate is determined by the contract closure date. Further
details on local government PFI revenue support arrangements can be
found on the ODPM's website
www.local.odpm.gov.uk/pfi/guid0304.pdf. PFI credits of £379m have
been approved for the Birmingham Highway Management Service scheme.
Highway Maintenance & PFI
4. The government has an objective in its 10 Year Plan to tackle the
maintenance backlog in local roads. The backlog is made up of three
element s - carriageways and footways, bridges and retaining walls,
and street lighting. For carriageways and footways the National Road
Maintenance Condition Survey (NRMCS) results for the three year
period 1998-2000, estimated this backlog at £2bn.
5. The bridges and retaining wall backlogs were estimated in 2000 at
£750m from Local Transport Plan returns and CSS (formally the
County Surveyors Society) surveys. The street lighting backlog was
calculated in 2000 at £1bn based upon surveys by the CSS and
the lighting industry.
Birmingham Highway Maintenance PFI Project
6. The scheme proposes initial capital investment of £169m and on
going service costs of £2.045bn in the road network over the 25 year
period of a PFI contract. Birmingham has a total of 197 carriageway
kilometres of principal roads, 237 carriageway kilometres of other
classified roads and 2,054 carriageway kilometres of unclassified
roads. Recent technical studies indicated that 15% of the city
council's principal roads are in a critical condition.
7. Improvements will also be made to the street lighting service.
Some 81% of the city's 85,000 street lighting units will be over 30
years or older within the next five years. The scheme will involve the
total replacement of the street lighting stock over the course of the
contract with 58,000 of the oldest lighting columns being replaced
within the first five years. An additional 34,000 lighting columns
will also be installed over the course of the 25 year contract
increasing the city's lighting stock to 119,000 and improving
lighting standards. Improvements to the quality of the authority's
road network will assist the council in delivering key strategies and
will address specific objectives in both Birmingham's best value
service improvement plan of its highway maintenance service and also
the local transport plan.