Laura Sharman 23 August 2016

24 councils could face legal action over high-interest loans

Residents from 24 different local authorities have mounted legal objections to the use of the controversial high-interest Lender Option, Borrower Option (LOBO) loans by councils.

The loans came to prominence after a Channel 4 Dispatches programme revealed that around 240 local authorities had taken up to £15bn in LOBO loans from private banks, which charge interest rates of more than 7% in some cases.

An inquiry into the loans also revealed some councils had paid brokerage fees of £25,000, compared to £75 for the equivalent Public Works Loan Board (PWLB) loans.

The legal objections against LOBO loans have been lodged by residents under the 2014 Local Audit and Accountability Act over the past two months, claiming the loans are ‘irrational’ expenditure and therefore unlawful.

Researcher at Debt Resistance UK (DRUK), Joel Benjamin said: ‘UK local government finance is completely unregulated, so it’s great to see local residents around the country taking action, demanding accountability over how billions of pounds of public money is spent.

‘For the past six years, councils have been passing down savage cuts to the poorest in society, using bailiffs to violently recover debts from the working poor, claiming they have no other option.’

Debt Resistance UK says a ‘significant’ proportion of LOBO loans should be cancelled so councils can refinance at lower rates of interest. It is also calling for full transparency over how public money is being spent in the form of these loans.

SIGN UP
For your free daily news bulletin
Highways jobs

Social Worker - Adult Social Care (CLDT)

Bolton Council
£31,895
This is a permanent Social Work role in Adult Social Care. Bolton, Greater Manchester
Recuriter: Bolton Council

Principal Programme Officer

Bolton Council
£35,336
Do you enjoy variety and change? Can you keep your eye on the detail whilst also thinking strategically? Bolton, Greater Manchester
Recuriter: Bolton Council

IDT Junior Developer

Telford & Wrekin Council
£28,226 - £30,095
Telford & Wrekin Council are seeking an enthusiastic and highly motivated Junior Developer. Telford, Shropshire
Recuriter: Telford & Wrekin Council

Activities Leader (Outdoor Adventurous Activities)

Leicestershire County Council
£20,856
Lead activities and ensure that delivery of programmes are of a high standard. Leicester, Leicestershire
Recuriter: Leicestershire County Council

Transition Support Worker (Complex Needs)

Leicestershire County Council
£19,701
This is an exciting opportunity for to work with an experienced team delivering high quality learning opportunities and care. Leicester, Leicestershire
Recuriter: Leicestershire County Council

Partner Content

Circular highways is a necessity not an aspiration – and it’s within our grasp

Shell is helping power the journey towards a circular paving industry with Shell Bitumen LT R, a new product for roads that uses plastics destined for landfill as part of the additives to make the bitumen.

Support from Effective Energy Group for Local Authorities to Deliver £430m Sustainable Warmth Funded Energy Efficiency Projects

Effective Energy Group is now offering its support to the 40 Local Authorities who have received a share of the £430m to deliver their projects on the ground by surveying properties and installing measures.

Pay.UK – the next step in Bacs’ evolution

Dougie Belmore explains how one of the main interfaces between you and Bacs is about to change.