The two councils are drawing up plans for further joint working to deliver big savings in administration.

The councils say the looming government funding cuts for years ahead leaves them with no option.

The two councils have awarded the five-year contract to Balfour Beatty, which will take over from Carillion when Warwickshire’s current contract ends in May 2011.

There is an option to extend the agreement for a further four years, subject to performance, making the total contract worth up to £200m over nine years.

Cllr Alan Cockburn, Warwickshire’s portfolio holder for environment and economy, said: “The close proximity of Coventry and Warwickshire means it is makes sense to link up certain highway activities and offer a joined-up service to deliver better value.”

Paul Galland, Warwickshire’s strategic director for environment and economy, said the contract was one of the first of its kind in the Midlands region.

He said the aim was to create a contract which avoided complex clauses, utilised modern IT systems, promoted ‘lean business’ processes, and ‘requires excellent service by our contractor in to order gain contract extensions’.