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Leeds council confirmed in a statement that it would be 鈥渨riting to a number of contractors this week seeking compensation鈥�.

It added: 鈥淲e will be considering further courses of action should it prove necessary.鈥�

The council would not reveal which firms it had written to, but parties named by the Office of Fair Trading (OFT) as engaging in cover pricing on projects in Leeds include Carillion, Strata, Caddick, Richardson Projects, P Casey and Henry Boot. All of these declined or were unable to comment.

Alan Davis, partner at law firm Pinsent Masons, described Leeds鈥� demand as a 鈥渧ery aggressive step鈥�.

He said: 鈥淚f the contractor refused to respond or make a payment, it would be strange for the council not to follow it up. It indicates that the council would be prepared to sue for damages.鈥�

If the contractor doesn鈥檛 respond, it would be strange for the council not to follow it up

Alan Davis, Pinsent Masons

However, Davis added that it would be difficult for the council to prove its loss. 鈥淎ny claim will be purely speculative,鈥� he said. 鈥淭he council will have to prove how much prices were increased by as a result of cover pricing.鈥�

The news comes as the YORbuild procurement consortium of local authorities in Yorkshire and Humberside prepares to announce whether it will effectively blacklist firms found guilty by the OFT.

The consortium, which procures up to 拢1.2bn of work annually, had included clauses allowing it to terminate framework deals with suppliers found guilty by the OFT. A decision is due to be made shortly.

But Julia Evans, chief executive of the National Federation of Builders, urged local authorities not to victimise firms. 鈥淭he contractors have paid their fines and local authorities shouldn鈥檛 discriminate against them.鈥�