It was 2015. The shock of the general election results was giving way to despair. However, a resurgent local Green Party had just saved our deposit in West Ham for the first time.
Debt Resistance UK’s Joel Benjamin then contacted me with a special mission. With the help of financial journalists and experts, he’d uncovered a financial scandal. He needed a Newham resident to ferret out details. I was intrigued.
It turned out that Newham Council had taken out over £500 million in so-called LOBO (lender option borrower option) loans. The annual repayments on these dreadful financial products are over £50 million – coincidentally, the same amount that the council must slash from its budget by 2019. And the same as 80 per cent of our council tax payments!
A LOBO is not really a loan – it’s a derivative product packaged as a loan so that bankers can get around local government borrowing rules. Councils (and they are mostly Labour councils) are locked in for up to 70 years! To exit before then, Newham would have to pay over £1 billion. One whistle-blower told us he would rather shoot himself in the face than take the LOBOs he was selling.
Barclays has now converted its LOBOs into fixed-rate loans because of our campaign, but this isn’t enough. We don’t know the details yet – some problems could remain. Most importantly, a ‘no-win, no-fee’ legal firm wants to help councils challenge the banks in court for mis-selling. Join with us and let’s get billions back from the banks!
If you want to check whether your council has these loans, go to: lada.debtresistance.uk