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Transport minister Tony McNulty today announced that the government ...
Transport minister Tony McNulty today announced that the government

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

private finance initiative credits to Birmingham City Council.

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

pedestrians alike.

'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 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.

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