Laura Sharman 27 October 2021

More councils urged to exit 'toxic' LOBO debt

More councils urged to exit toxic LOBO debt image

Councils have successfully exited at least £1.6 bn from 'expensive and risky' LOBO loans, new figures have revealed.

Research for Action has published a national database of council LOBO loans, tracking the number and cost of these debts.

The LOBO loan scandal was first highlighted back in 2015, when Dispatches found that around 240 local authorities have tad up to £15bn in LOBO loans from private banks, which charge interest rates of more than 7% in some cases.

The database shows that since then, councils have exited at least £1.6bn and transformed £3.9bn into fixed-rate loans.

Ludovica Rogers, database project lead, said: 'Our new database is the first comprehensive, publicly-accessible depository of information about LOBO loans. We hope it will enable more UK councils to exit the loans, restoring public accountability and reclaiming public money for much-needed local services.'

The research shows that 95% of outstanding LOBO debt is now owed to European Banks, with councils projected to pay at least £14bn in interest payments until the loans end.

Joel Benjamin, researcher and campaigner, said: 'Our figures confirm after years of citizen-led pressure, local authorities can save millions of pounds by refinancing toxic bank debt, with low risk, low interest, loans from the Treasury PWLB.'

He added: 'A root and branch inquiry of council treasury management practice is required, to understand why borrowing and investment in the public interest appear to be the exception, not the rule?'

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