Laura Sharman 07 July 2015

Betts calls for inquiry into ‘outrageous’ LOBO loans

Betts calls for inquiry into ‘outrageous’ LOBO loans image

An inquiry into how councils were sold £15bn of high interest loans could be launched, following last night’s documentary from Channel 4 Dispatches.

The programme - How councils blow your millions - revealed that around 240 local authorities have taken up to £15bn in Lender Option Borrower Option (LOBO) loans from private banks, which charge interest rates of more than 7% in some cases.

Expensive exit fees have stopped councils from moving to a better deal, which can often run for up to 70 years.

Clive Betts, chair of the Communities and Local Government Committee, is now calling for an inquiry into the loans after hearing private banks made more than £1bn in upfront profits from these loans. He also said it was ‘outrageous’ that some council advisers earned commission if town halls took out one of these risky loans.

He told the programme: ‘In the end a council appoints and pays for an independent outside advisor to come in they expect that advice to be independent and not to be paid for by somebody else who is gaining a profit from these loans being set up. I mean that really is scandalous if that's happened.’

The documentary revealed that the London Borough of Newham had the largest amount of LOBO loans at £563m, and was paying up to 7.6% in interest rates.

In competition with the PWLB image

In competition with the PWLB

Christian Wall considers what alternative funding channels are available to local authorities beyond the Public Works Loan Board.
Highways jobs

Chief Planning Officer

Leeds City Council
Up to £106k
Leeds is a city that’s brimming with confidence. Leeds, West Yorkshire
Recuriter: Leeds City Council

Senior Revenues Specialist

Eastleigh Borough Council
£39,700 - £42,044
If you are excited by this opportunity and feel you have the skills, experience and attitude we are looking for, we would love to hear from you. Eastleigh, Hampshire
Recuriter: Eastleigh Borough Council

Environmental Health Officer WCC10676

Westminster City Council
£33,759 - £47,274 per annum
As an Environmental Health Officer in Food Safety or Health and Safety, you will be responsible for... London (Greater)
Recuriter: Westminster City Council

Children's Services Social Worker - ASYE Programme

Royal Borough of Greenwich
£28,215 - £34,130
You’ll need to demonstrate an interest in working with children and their families, and show us that you can manage the... Greenwich, London (Greater)
Recuriter: Royal Borough of Greenwich

Head of Property and Facilities

Essex County Council
Up to £74K
This role is part of the Capital Investment and Delivery leadership team and has a key role to play in shaping and... Chelmsford, Essex
Recuriter: Essex County Council

Local Government News

Latest issue - Local Goverrnemnt News

The March issue of Local Government News explores alternative funding channels that are available to councils beyond the Public Works Loan Board, what hurdles merging councils face in coming together, and how local government is handling GDPR.

This issue also has a special highways and street lighting section exploring how councils can use lighting to embark on their smart city journey and using IoT technology to weather the storm.

Register for your free magazine