Laura Sharman 11 March 2016

Council challenged over 'extreme' LOBO loans

Council challenged over extreme LOBO loans image

A resident has issued a legal challenge to her local council over its ‘irrational’ use of Lender Option, Borrower Option (LOBO) loans.

Rachel Collinson is arguing that Newham Council was wrong to take out £563m in variable rate LOBO loans and is calling for auditor PwC to apply to the High Court for a ruling that the borrowing was illegal.

Ms Collinson said: ‘If Newham Council followed the lead of London housing associations and challenged the banks on what appears to be a clear case of LOBO loan mis-selling, we could lift this painful debt burden from the backs of some of the UK’s poorest people here in Newham.'

Debt Resistance UK, who highlighted the extent of LOBOs in local government through freedom of information requests, said High Court action could have a ‘significant’ impact on local government finances.

Jamie Griffiths from the campaign group, said: ‘Newham is an extreme case with over £1,800 of LOBO debt per resident of the borough but we’ve seen the same thing happening all over the country. Many of the cuts and council tax increases being made by local authorities are greatly exacerbated by interest payments on loans that should never have been taken out in the first place.

‘We’re calling for citizen-led challenges like that made by Rachel Collinson in each of the 250 councils affected by LOBO loan mis-selling.’

A Newham Council spokesperson said: 'The objection relates to the council’s decision to take out LOBOS between 2002 -2009 and this matter is with the council’s external auditors for their consideration under their statutory process.'

LOBO loans were pulled into the spotlight last year, following a documentary from Channel 4 Dispatches which revealed 240 local authorities had taken up to £15bn in LOBO loans.

An inquiry by the Communities and Local Government Select Committee heard these loans had interest rates of more than 7% in some cases, and some councils had paid brokerage fees of £25,000.

Overcoming the barriers to Commercial Card use image

Overcoming the barriers to Commercial Card use

Want to reap the benefits of Commercial Cards but coming up against some challenges? James Sykes, Head of Commercial Cards, Lloyds Bank and David Legg, Head of Corporate Card Products, Lloyds Bank, discuss how the payments industry is helping organisations unlock their true value.
SIGN UP
For your free daily news bulletin
Highways jobs

Commercial Customer Manager

North Yorkshire County Council
£39,880 to £43,857
Are you someone who is innovative and has the drive to increase revenue for the Council whilst ensuring excellent service provision to our customers? Northallerton, North Yorkshire
Recuriter: North Yorkshire County Council

Social Care Lead Officer

Sandwell Metropolitan Borough Council
£35,745 - £40,876 pro rata per annum
A vacancy has become available for a part time Social Care Lead Officer, to cover in... Sandwell, West Midlands
Recuriter: Sandwell Metropolitan Borough Council

Communications & Corporate Affairs Manager

Sandwell Metropolitan Borough Council
£47,845 - £50,900 per annum
To apply for this role please upload your most recent CV that sets out your relevant experience against the job description. Sandwell, West Midlands
Recuriter: Sandwell Metropolitan Borough Council

Career Grade Planning Officer

Royal Borough of Greenwich
£27978 - £37722 per annum + n/a
Career Grade Planning Officer - West Area and East Area Team The Royal Borough of Greenwich continues to faces an unprecedented growth agenda in terms England, London
Recuriter: Royal Borough of Greenwich

Highway Engineer - Reactive Maintenance

Bracknell Forest Borough Council
£35,354 - £40,506 incl. LWA, plus £963 car allowance
We make a difference to the environment we live in. Come and help us manage our highway infrastructure. Bracknell, Berkshire
Recuriter: Bracknell Forest Borough Council

Public Property

Latest issue - Public Property News

This issue of Public Property examines how how flexible workspaces can lead the way in regeneration for local authorities, Why local authority intervention is key to successful urban regeneration schemes and if the Government’s challenge of embracing beauty is an opportunity for communities.

The March issue also takes a closer look at Blackburn with Darwen Council's first digital health hub to help people gain control over health and care services.

Register for your free digital issue