A NORTH-East authority has agreed to spend £12 million to refinance its debts in a bid to save money.

Durham County Council owes £43 million through private finance initiatives [PFI] taken out to build three schools in the region.

Shotton Hall Academy, Shotton Hall Primary and Sedgefield Community College were built between 2010 and 2011 thanks to private sector investment.

The council still owes £43 million in relation to the projects but wants to reduce the amount it repays by taking advantage of lower interest rates.

It is working with five other local authorities to combine debts totalling £390 million to try and get a more competitive deal.

The authorities will have to pay £110,000 million, of which Durham County Council will pay £12 million, to get out of current agreements, taking the debt to £500 million.

But the council says even with the increased debt, the total repayments over the next 20 to 22 years will be lower because of the lower interest rate.

Deputy leader Cllr Alan Napier said: “We would not progress if we do not get value for money. Although early redemptions costs could be higher, advisers are confident the historic low interest rate will ensure the financial benefit will exceed any costs incurred.

“We are confident savings will be achieved.”

The council is also paying £68,000 to finance specialists Ernst and Young and legal firm Bond Dickinson achieve “optimum value for money.”