DURHAM County Council may use the controversial private finance initiative (PFI) to build and repair schools.

The authority is facing a huge backlog of repairs and some older buildings are unsuitable for modern needs. The council says in some cases there is an 'adverse impact' on educational standards.

It does not have the money for improvements and funding from the Government would not cover the cost.

Over the next three years between 700 and 1,000 surplus places could occur in primary schools. The repairs and maintenance backlog would cost £89m compared with available estimated funding of £45.5m. A further £196m needs to be spent making buildings suitable for modern teaching.

Neil Foster, lead cabinet member for education, said: "The scale of capital work required to address these problems in our schools is such that traditional capital funding routes will not suffice and will not allow the longer term financial certainty to prepare a strategy for dealing with them.

"The PFI route now constitutes a major, additional source of capital approval from the Government. Whatever the views of PFI - and views differ - it is increasingly becoming a front-runner in the funding stakes."

The cabinet agreed to explore the possibilities of PFI and will consider a report in September that will outline proposals for schemes to remove surplus primary places. The council will consult parents, schools, children, trades unions and the public.

Critics say the PFI system - in which private firms finance and build facilities and lease them - costs more long-term than if they were built with public money.