Around 400 council staff were outsourced to Amey two years ago, just after the company issued a warning that it had bid for too many PFI contracts.

At a secret meeting tonight, the council is expected to take steps to formally cancel the contract, and make arrangements to rehire the staff.

In a note to staff obtained by newbury.net, chief executive Jim Graham confirmed that "we are able to tell you that we have achieved a basis for an amicable settlement that will see the contract draw to a close with effect this summer. With a considerable amount of negotiation still to conclude, you will understand that it’s not possible to go into detail at the moment except to say that the provisional agreement is satisfactory to both parties."

He added that the fact the contract had collapsed after two of its 10 year term "does not detract in any way from the merits of the original decision or the successes of the venture."

At the time of signing, then council leader Keith Lock said: "I would also like to stress that this is not about privatising Council services. It involves two organisations working together in a genuine partnership and sharing resources and expertise for the mutual benefit of those who live and work in West Berkshire."

Some aspects of the contract have been regarded as a success, such as new IT systems. But delays in the planning system have brought threats from John Prescott's inspectors.

The cost of reemploying the staff remains unclear, but unions have been briefed by council managers.

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