Capita’s LOBO response, Aviva’s new mandate, rent cuts and housing plans, end of an energy partnership

Capita responds to LOBO inquiry
Capita Asset Services says it has never hidden payments from money brokers arranging Lender Option Borrower Option (LOBO) loans, in written evidence to MPs investigating the sale of the products. Witnesses appearing before the communities and local government committee in July raised concerns about financial transactions between treasury advisers and brokers in relation to LOBOs sold to councils prior to 2011. Capita’s letter said: “Sector Treasury Services Limited was part of the Capita group of companies during the period in question (Sector was rebranded as Capita Treasury solutions in 2013). We can confirm that we do not currently receive any commission or other payment from Tullett Prebon or any other money broker operating in the LOBO market.  Where we have received payments from money brokers in the past, these arrangements were disclosed to local authorities under our standard terms of business at the relevant times.” It also said that that Sector only acquired Butlers in 2010. “As such, we are unable to comment on Butlers’ specific role in these loans as we had no affiliation with them at the time.”

Council expenditure and debt rise
Capital expenditure by English councils rose 14.7% to £22.6bn in 2014/15 from £19.7bn the previous year, according to government figures. The DCLG’s Local Authority Capital Expenditure and Receipts, England: 2014-15 Final Outturn report said that the figure was lower than the original forecast of £27.1bn. Capital receipts increased from £2.7bn to £3bn while net debt of local authorities has fallen by 14.2% over the past five financial years.

Aviva wins pension fund mandate
London Borough of Bexley has awarded Aviva Insurance a contract to manage £31m of its pension fund assets. The mandate, could rise to £50m, representing around 10% of the total fund value. The proposed initial mandate is a UK property multi-manager investment, and has been awarded on a rolling basis, to be reviewed every three years.

Rent cuts set to stymie authorities’ housebuilding
Councils are set to slash their housing development plans as a result of plans announced in the Summer Budget to reduce social housing rents by 1% a year, according to the District Councils Network. The network said the move is likely to cost district councils £718m over the next four years, with the gap plugged by a £210m cut in housing development, plus reductions in capital improvements and housing management, along with debt refinancing.

Carillion’s energy partnership with Birmingham switched off
Birmingham City Council is set to end a joint venture with energy company Carillion Energy Services after changes to government funding for green initiatives. The council’s cabinet will next week vote on the move, which officers say are necessary due to the failure of the national Green Deal, and changes in support from government. The joint venture would close from April next year.