Laura Sharman 07 July 2015

Betts calls for inquiry into ‘outrageous’ LOBO loans

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.

SIGN UP
For your free daily news bulletin
Highways jobs

Interim Head of Fostering

Tile Hill
Negotiable day rate
We are working with a local authority client in London who is looking for an Interim Head of Fostering, the local authority was last inspected as “... London (Central), London (Greater)
Recuriter: Tile Hill

Interim Head of Children in Care and Care Leavers

Tile Hill
Negotiable day rate
We are working with a local authority client in London who is looking for an Interim Head of Children in Care and Care Leavers, the local authority... London (Central), London (Greater)
Recuriter: Tile Hill

Head of Regeneration and Economy

City of York Council
£59,593 - £68,094
York is a wonderful place to live and work and it is quite rightly famous across the globe. York, North Yorkshire / Hybrid
Recuriter: City of York Council

Clinical Lead, North Essex

Essex County Council
Negotiable
Clinical Lead, North EssexPermanent, Full TimeUp to £57,869 per annumLocation
Recuriter: Essex County Council

Assistant Director Legal,&Governance/Monitoring Officer

Rochdale BC
£70,340 - £81,589
The Assistant Director role has breadth of responsibility beyond legal services incorporating Constitutional and Democratic Services Rochdale, Greater Manchester
Recuriter: Rochdale BC

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.