Lambeth borrows £40m for care home abuse compensation scheme

London Borough of Lambeth has borrowed £40m from the PublicWorks Loan Board to help fund a redress scheme for victims of abuse at its former children’s homes.

The Lambeth Children’s Homes Redress Scheme will compensate survivors of historical sexual, physical and psychological abuse suffered at the borough homes.

In 2017, the council received a capitalisation direction from central government, allowing it to use £100m of capital budget to fund the scheme.

A statement from the council said: “The redress scheme, the first of its kind in the UK, is designed to enable survivors of sexual, physical and psychological abuse in Lambeth children’s homes dating back to the 1930s and up to the 1990s to receive the financial redress to which they are legally entitled without having to use the court system.”

The redress scheme provides compensation of up to £125,000, with all former residents of a Lambeth children’s home who subjected to a harsh environment eligible to receive a sum of up to £10,000.

Lambeth estimates that the possible number of applications received during the two-year life of the scheme will be around 3,000 at a potential total cost of £100m for claims within the scheme, plus a potential £40m for a number of complex claims dealt with outside of the scheme.

The council said that it expects that the redress scheme will have a commitment of £38m over the first year.

A remaining £2m would help fund the delivery programme of its standalone housing company, Homes for Lambeth, estimated at £21.5m in 2019/20.

Lambeth’s borrowing was part of a total of £694.2m lent to councils through the PWLB in January.

This takes PWLB lending to £8.0bn over the past 12 months, up 81% on the £4.4bn during the 12 months to January 2018.

The biggest borrower in January was the Greater London Authority’s Mayor’s Office for Policing and Crime.

The office took £200m to help fund its capital programme, which is set to rise from £249m in 2019/20 to £382.4m in 2020/21.

Manchester City Council also took £150m in January, to help fund its capital programme.

A statement from the council said: “We have benefited as an authority from being able to internally borrow, but with the move to the Greater Manchester Combined Authority of the Housing Investment Fund monies from government that the council has previously held, our internal borrowing position will unwind.”