THE long-awaited rebuild of Durham Road Infants and Junior schools suffered another setback - with Newport council admitting talks with a developer have collapsed.

The council is unable to agree how to replace the two dilapidated schools with its "preferred" choice developer.

Now the relationship is over and the council has restarted talks with its second choice company.

Asked by Councillor Alan Perry what stage the plans were at, Council leader Sir Harry Jones told a meeting of Newport council: "I don't know how many times I have felt embarrassed at my inability to give a straightforward answer."

He said the council had used the "only option" and entered a Private Funding Initiative bid for the schools.

He said: "In 2001 we appointed a preferred bidder. The bidder has failed to show willingness to agree on satisfactory terms within the contract of the scheme. "As a result we have suspended the preferred bidder and are in negotiations with the reserve bidder."

He said this had not been disclosed until now because the council needed the permission of the first company to use the second.

Ken Goodger, chairman of the schools' governors, told the Argus the board had never wanted the rebuild funded by a PFI.

Mr Goodger added that if the current negotiations failed then the project should be handed over to the public sector.

Mr Goodger said: "Rhodri Morgan recently announced there is public money available for new school buildings and if this latest PFI deal falls through the council should bid for that. If a deal can't be reached then it should become an entirely public project. The board have never been happy with the use of PFI - just look at the endless delays.

"If it does eventually go through we will end up in a building not under our control over and with an invisible charge hanging over us at the end of the lease period." Both schools have been marked as priority rebuilds for over 15 years, and conditions have since slid to a level branded "Victorian" and "unhealthy" by inspectors.

Plans for new schools at the controversial Glebe-lands site - a former tip with contamination issues - have been plagued with delays.

Chris Hill, of the Glebelands Action Group, which is against rebuilding replacement on what they say is a dangerous site, told the Argus: "We've been aware the deal had fallen through. We asked the council and they just evaded us.

"All we are asking is that this process is transparent so we know what is planned for the future of our children. From the beginning the council has covered information up."