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Caerphilly County Borough Council will consider terminating a 30-year private contract which funded two schools early in a bid to “generate significant annual savings”.

Ysgol Gyfun Cwm Rhymni and Lewis School Pengam were built and operated using money that came from a Private Finance Initiative (PFI) agreed in 2002.

Now, the council is considering terminating the contract nine years early.

According to Caerphilly County Borough Council, benefits from terminating the contract early include “parity” in how schools across the borough are funded and operated as well as “significant annual savings”.

This will affect the provision of building maintenance, catering and grounds maintenance services – educational aspects will not be affected.

Though specific savings cannot be confirmed before the contract is terminated, some indications suggest the revenue budget savings could be £2 million a year. 

Cllr Carol Andrews, council cabinet member for Education, said: “Should full Council ultimately decide to support this decision, it will bring about parity in the way Caerphilly schools are funded and operated by the local authority.

”As well as ensuring a fairer approach to funding across all of our schools, the council can also generate significant annual savings through the early termination of the PFI contract.”

“It is important to note that this is purely a contractual matter between the council and the PFI consortium on a number of non-educational services and will have no impact on pupils or teaching staff at the schools.”

There is, according to a council report on the subject, an “affordability gap” between normal funding levels for schools and payments to the contractor – despite funding support from the Welsh Government. This is only made worse by the fact the council is now under “significant financial pressure”. 

The contract, which is due to run until August 31 2032, came with funding of around £25.4m which was provided originally by Royal Bank of Scotland (RBS) and was then taken over by Lloyds Bank in 2017 – this was part of wider refinancing at the time. 

“We will keep both school communities informed and updated throughout the process,” added Cllr Andrews.

The PFI contracts will be considered by the council’s Joint Scrutiny meeting on February 28 before being finally decided in March.