The search has begun for a new contractor to deliver Birmingham City Council's highway maintenance contract following Amey's exit.

The council and Amey agreed to end the Birmingham Highways PFI contract, with the contractor to pay the council £160m this year and the remaining £55m over the next six years.

After Amey secured a £2.7 billion contract to look after the council's highways for 25 years in 2010, the two companies were involved in a legal dispute.

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In a joint statement, Birmingham City Council and Amey said: "A consensual settlement agreement has been signed for Amey plc to exit the Birmingham Highways PFI contract.

"As part of the agreement, Amey will continue to provide services until a replacement contractor is found to deliver those services on an interim basis. That interim replacement will be sought as soon as possible, but will be in place no later than 1st April 2020. The full retendering of the project to find a permanent replacement contractor will take place during 2020/21.

"All parties will be working closely in the coming months to ensure the smooth transition of services and staff."

(CM/JG)