Debt Resistance calls for local authority debt audits following the #LOBO loan scandal
On Monday 6th July Channel 4 Dispatches exposed the rip-off at the heart of local government finance after a 2 year battle by campaigners to force the LOBO loan scandal into the mainstream media.
Dispatches presented the results of 18 months research by campaign collective Debt Resistance UK involving 300+ FOIA requests to around 250 local authorities holding LOBO loan bank debt. All the FOIA requests are available publicly on theWhatDoTheyKnow website and a description of the research can be found on ourwebsite.
Citizens immediately flocked to twitter to vent their outrage, using the #Dispatches, #LOBO and #LOBOscam hashtags, now featured in our DRUK Storify.
In response to LOBO loan scandal, Debt Resistance UK are calling for local government debt audits, and are convening a public meeting on Thursday 16 July to discuss next steps for the campaign.
Vica Rogers, from Debt Resistance UK explains:
“To be clear, a call for Local Authority Debt Audits is not an attack on Local Government, but an attempt to reclaim our democratic institutions and the common resources they manage from the predatory clutches of financial institutions.”
Dispatches featured analysis of high interest bank LOBO loan debt pushed by Barclays and RBS on the advice of CAPITA and examined its effects on council austerity cuts at Cornwall, Edinburgh, Walsall, and at Newham Council in London.
Cornwall Conservative Councillor Fiona Ferguson described LOBO loans as:
“a great leakage of money out of the Council” as the Council is paying “more then 7% interest.”
Financial Analyst Abhishek Sachdev from Vedanta Hedging said:
“These Council Officers thought they were getting a good deal…They didn’t understand that this was a lose-lose bet for them”
In response to Newham Council’s half billion pounds of LOBO bank debt costing ratepayers an extra £13 million pounds each year in bank interest, Alan Haughton, a Newham based campaigner against London airport expansion said:
“It’s absolutely abhorrent that this crushing debt for the people of Newham has been orchestrated under the rule of the Labour Mayor Robin Wales. Time after time, we’ve seen economic failures under his Thatcher like rule. From £5.5m wasted on the London Pleasure Gardens to £40m given to the Porn Baron owners of West Ham, friendship with Robin costs taxpayers dearly. Meanwhile the people of Newham are being evicted and relocated across the UK. It is time for Wales to resign. He has failed Newham, he has failed labour, he has failed. Period.”
On the role of the advisers Clive Betts MP, Chairman Local Government Select Committee stated:
“Outrageous, in the end if a council appoints and pays for an independent outside adviser to come in they expect that advice to be independent and not to be payed for by somebody else who is gaining a profit from these loans being set up. That really is scandalous if it has happened. […]I think the FCA now ought to investigate this and if it hasn’t got the powers the government should give it the powers to regulate this in the future. […]I think the Committee will want to look into this very seriously indeed.”
Inspired by citizen debt audits in Spain (PACD), debt audits in the global south (notably Ecuador 2008), and the public debt ‘truth commission’ in Greece, Debt Resistance UK (DRUK) are calling for local authority debt audits across the country to expose how the framework of local government finance has been co-opted to work in the interests of the private sector, and not in the interests of the people.
Joel Benjamin, from Debt Resistance UK:
“Tomorrow in the summer budget George Osborne will force government to operate a budget surplus and limit public sector borrowing from central government. As we have seen with the LOBO scandal, all this will achieve is to force public institutions to borrow money from more expensive and risky bank sources, feeding the banks with more tax-payers money.”
Links to further information:
UK Local Authority Debt Audit website: https://lada.debtresistance.uk/
Debt Resistance UK website: https://debtresistance.uk/
Interactive map of local authority debt: bit.ly/LADAmap
What is a LOBO loan? https://bit.ly/LOBOLoan
LOBO Loans are potentially illegal https://bit.ly/DebtTrap
The conflict of interest https://bit.ly/LADA3
No one is watching https://bit.ly/LADA4
Which banks are involved https://bit.ly/LADA-Banks
