Councils are failing to save £16bn by not replacing their expensive LOBO loans with ones from the Government, new research has warned.
Analysis of the top 10 LOBO loan borrowers by Research for Action found the councils are missing out on savings of around £4bn in interest payments over the next 40 years by not replacing them.
It applied the average interest rates and years to maturity from each council’s loan portfolio, comparing it the PWLB rate of 2.21%.
Researcher Joel Benjamin said: ‘HM Treasury has been aware of the billions of pounds of savings available on mis-sold bank LOBO loans since at least March 2016, when they were asked to investigate toxic LOBO loans in an open letter signed by MPs, academics and councillors, yet two years on, treasury continues to ignore the problem, as billions of pounds of unnecessary further cuts decimate local services.’
