Schools’ private finance deal cost council £91m and counting

Nicholas Thomas, Local Democracy Reporter

A PFI deal for two new schools has cost a county borough's council £91 million to date.

Caerphilly County Borough used money from the private sector via a PFI (Private Finance Initiative) to build new school facilities at Lewis School, Pengam and Ysgol Gyfun Cwm Rhymni, Fleur de Lis.

As part of the deal, the council agreed a 30-year contract for maintenance, catering and cleaning at the two sites, which was due to run until 2032.

But councillors agreed in 2023 to voluntarily terminate the contract, in the hope of saving around £2 million annually by bringing those services in-house.

Following a question from Blackwood independent councillor Kevin Etheridge, at a recent meeting, the local authority has now provided a breakdown of its spending on the PFI contract, which it said was terminated last October.

It shows the council has spent more than £91 million on the contract so far, including £5.6 million in the last financial year.

The overall sum also includes around £340,000 spent on legal fees and consultants, the authority told Cllr Etheridge.

Ending the contract would mean the council owed compensation, according to a previous council report.

In response to the councillor’s question, the local authority said the “process to agree final costs is ongoing, so a figure cannot be provided at this stage”.

“A further report will be presented to council in due course setting out the termination costs, value for money and revenue budget savings,” the council added.