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Highways giant Amey, which directly employs 400 staff in the city, has started to lay off workers as its bitter dispute with Birmingham City Council rumbles on.

Twenty street lighting engineers received redundancy warning notices last week.

They are the first casualties of the long running dispute between the council and Amey over the state of the city's roads.

The two organisations are locked in dispute over the £2.7 billion highways contract, with both sides agreed that pulling the plug on the deal will be the best option.

(Image: Cllr David Barrie)

A divorce deal is now being hammered out - but not quickly enough to save 20 jobs, according to Amey.

We understand the redundancy warning has come because of the protracted dispute, which has left the company without enough planned work for all its staff.

"Amey have had deals on the table for many months but the council has dragged its feet," said one insider.

"We are now finally working towards an agreement but it could be too late for some staff."

The company is working closely with Unite the union over possible job losses, while also pressing for a rapid conclusion to the dispute.

Birmingham City Council's cabinet met last month to agree to negotiate a separation, accusing Amey of failing to meet professional standards of workmanship, not doing urgent repairs quickly, and being 'unreasonable and argumentative' when pulled up on its failings.

Once sorted, the deal would conclude a tortuous nine-year relationship between the council and the service arm of Amey that has resulted in a flurry of costly court cases and triggered a wave of furious complaints from residents and motorists.

(Image: Birmingham Mail)

Birmingham City Council said the council was "committed to reaching a settlement" and intends to present an agreement to Cabinet for approval as soon as June 25.

“Negotiations are currently at an advanced stage and there is a willingness by both parties to reach an agreement as quickly as possible," said a spokesperson.

"The council remains committed to reaching a settlement and it is our intention for an agreement to be presented to Cabinet for approval on 25 June.



"However, our key concern remains ensuring that the taxpayers of Birmingham see the maximum investment in the city’s road network and we are therefore scrutinising the details of any proposals carefully to ensure that this remains the case before concluding any deal.”

(Image: Keith Beresford)

Amey has been pressing for more than a year to end the relationship, claiming the deal has been disastrous for the company.

In a damning report last month, the city council listed a catalogue of concerns about the actions of Amey under the terms of the £2.7 billion, 25-year deal.

The council still has a list of disputes with Amey over its work, "ranging from relatively small amounts to millions of pounds".

We have reported previously about disputes over multi-million pound fines and disputes over repairs to bollards and street lights.

The details of the deal and why cutting ties is complicated

The issue is complicated by the complex way the contract is funded and managed, which could prolong any settlement.

Infrastructure giant Amey successfully tendered for a PFI-backed contract with Birmingham City Council in 2010 to manage highways services for 25 years, at a total cost of £2.7 billion.

The council's contract is with a subsidiary, Amey Birmingham Highways Ltd (ABHL), which in turn contracts Amey Local Government (ALG) to provide highways maintenance and management services.

As part of the deal, Birmingham City Council receives £50.3m in PFI grants annually from central Government to help fund the contract.

The challenge for the city's legal and financial teams is to end its relationship with Amey LG, while preserving the PFI contract arrangements.

(Image: Birmingham Post and Mail)

This complexity is set out in last month's report to councillors, which points out that the council has no direct relationship with Amey LG.

The report states: "The terms of Amey LG’s release need to be agreed, including the amount to be paid...in settlement of its liabilities, when that money is paid and which liabilities are to be settled."

The next step is for the parent company ABHL to find a replacement contractor and organise a transition period - but if this is not done the council will need to bring in an interim contractor itself.