• Home
  • About
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

LOBO documentary puts councils in firing line

2
  • by Colin Marrs
  • in Treasury
  • — 2 Jul, 2015

DispatchesLocal authority treasurers and banks face renewed pressure over LOBO loans, with a Channel 4 documentary set to probe the issue on Monday.

Producers from the investigative series Dispatches were this week putting the finishing touches to the programme, which will bring the issue to a national TV audience for the first time.

The programme, presented by reporter Anthony Barnett, is titled “How Councils Blew Your Millions” and set to claim that the loans are now costing taxpayers millions of pounds a year.

A programme summary from Channel 4 says: “Barnett tracks down the banks that made enormous profits from offering complex loans to local authorities. And he speaks to the insiders who describe how these deals have left some councils with mammoth interest bills to pay at a time of huge pressure on public services.”

Channel 4 is understood to have worked with finance campaigner Joel Benjamin and author Nick Dunbar – long standing critics of councils’ LOBO deals – on the preparation of the programme.

Last month, Barnett and Benjamin asked questions about LOBOs at the annual general meeting of Royal Bank of Scotland.
Benjamin criticised a number of “inverse floater” LOBO loans from RBS to Edinburgh City Council which he said were currently costing more than current Public Works Loan Board rates.

Councils around the country have also faced a torrent of freedom of information requests in recent months seeking information on when LOBO deals were signed, with which financial institution and who the councils were advised by. It is unclear if these are connected to the Dispatches programme.

Treasury adviser Arlingclose is among those understood to have been interviewed on camera for the programme.

David Green, client director at the firm, told Room151: “Depending on the terms of the loan, and the market expected volatility of interest rates at the time the deal was struck, a fair rate for a LOBO agreed before 2008 would have been somewhere around 1% below long-term PWLB rates.  But many councils only received around a quarter of that discount.

“Few councils had access to the complex option valuation models required, nor the market data needed as inputs for such models.”

He added that because interest rates have remained low since most LOBOs were taken out councils have benefitted.

In September last year, following coverage of LOBOs in Private Eye, Mike Jensen, chief investment at Lancashire County Council, told Room151 that councils had profited from the deals.

“Overall, so far, the local authority community had done very well from these deals. Most were written 10 years ago so council have had a decade of cheap financing and most deals will continue to run efficiently for some years yet.”

The Dispatches episode is scheduled to air at 8pm on Monday 6 July.

Share

You may also like...

  • Councils prepare to resist complaints their LOBO loans are ‘irrational’ Councils prepare to resist complaints their LOBO loans are ‘irrational’ 25 Aug, 2016
  • Thriving in the pandemic: Avoiding the stragglers 12 Jan, 2021
  • Bournemouth launches mortgage loan scheme Bournemouth launches mortgage loan scheme 26 Jun, 2014
  • Cambridgeshire solar farm to generate £1m revenue per year Cambridgeshire solar farm to generate £1m revenue per year 14 Jun, 2017

2 Comments

  1. C4 Dispatches: How UK Local Government is being fleeced... says:
    2015/07/09 at 17:53

    […] DRUK do not suggest councils are solely to blame for borrowing from banks via LOBO loans, which many councils could not price, and did not fully understand. […]

    Log in to Reply
  2. C4 Dispatches: How UK Local Government is being fleeced... says:
    2015/07/09 at 18:27

    […] DRUK do not suggest councils are solely to blame for borrowing from banks via LOBO loans, which many councils could not price, and did not fully understand. […]

    Log in to Reply

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 20 hours ago

    New realities of investing cash and liquidity: “What to do now?”: Sponsored article: Brian Buck looks at the “unique challenge” for cash management strategies. As investors assess the ongoing impact of the pandemic on their business, levels of cash and… dlvr.it/RqVbk9 pic.twitter.com/ZElVASmEUV

    Room151 23 hours ago

    Extra finance promised by the government receives a broad welcome: Sponsored article: The financial pressures facing local authorities this year continue to pose challenges for council treasurers. While the launch of the UK’s Covid-19 vaccination… dlvr.it/RqTzTF pic.twitter.com/HCjH0pyHR5

    Room151 23 hours ago

    A savvy approach to managing your cash: Sponsored article: Caroline Hedges examines the need for active cash management to achieve a higher than average return. Last year saw the already mountainous pile of negative-yielding debt around the[...] dlvr.it/RqTzMK pic.twitter.com/uP0RQYTJLt

    Room151 2 days ago

    Putting alternatives at the heart of multi-asset portfolios: Sponsored article: Nick Edwardson looks at the assets that provide the “most attractive opportunities”. We believe that asset allocation is the primary driver of investment returns and that the… dlvr.it/RqQ2Qt pic.twitter.com/WLBzvRRRUQ

    Room151 2 days ago

    Thriving in the pandemic: Avoiding the stragglers: Sponsored article: George Crowdy looks at the sectors providing opportunities for sustainable investment. Throughout much of 2020, we talked about why sustainable investing has thrived in the pandemic,… dlvr.it/RqQ2NQ pic.twitter.com/dxiPWKFsPl

    Room151 2 days ago

    The development of CCLA’s mental health benchmark: Sponsored article: Amy Browne examines the importance of investing in mental health in the workplace. We are living through a public health emergency in more ways than one. Physical health[...] dlvr.it/RqQ2Jx pic.twitter.com/o6yRSCX3oF

    Room151 3 days ago

    Brexit: What the EU trade deal means for the UK economy: Sponsored article: Hetal Mehta looks at the impact of Brexit on economic prospects. Four and a half years after voting to leave the EU, on Christmas Eve the UK finally[...] dlvr.it/RqLBDt pic.twitter.com/No62srfE8h

    Room151 3 days ago

    Cash dethroned: The quest for liquid yield: Sponsored article: Peter Hunt and George Carne ask how treasury departments can balance the need for yield and liquidity. The massive stimulus and waves of liquidity provided by central banks[...] dlvr.it/RqLBDj pic.twitter.com/05g6Zhu1kU

    Room151 3 days ago

    Richard Harbord: Delayed “capital determinations” make section 25 opinions a new crunch point: The severe pressure on local government budgets now means section 151 officers confront a tricky call on  whether they can make a judgement on the robustness… dlvr.it/RqLBDV pic.twitter.com/vTAbDKFzkI

    Room151 4 weeks ago

    PWLB Consultation: Analysis straight from Dickens: Helen Radall and Paul McDermott present a legal examination of the new PWLB borrowing rules as Charles Dickens might have imagined it. Free and easy PWLB (“Marley” to his friends)[...] dlvr.it/RnmwLq pic.twitter.com/yFxcPrQqEG

    Room151 4 weeks ago

    Room151’s top stories from a momentous year: 2020 was the year in which local government grappled with Covid-19, funding strains, controversy over borrowing rules and the threat of financial collapse. It has been an exhausting and historic[...] dlvr.it/RnlpZg pic.twitter.com/g3myNyox6J

    Room151 4 weeks ago

    Tracy Bingham: 2020, a year best forgotten but also one of learning: Many will rush to erase 2020 from their memories but, writes Tracy Bingham, there were also many lessons about finance teams, strategic planning and leadership. 2020: A year we’d… dlvr.it/RnlpY2 pic.twitter.com/m7G1krrtCu

    Room151 4 weeks ago

    Settlement must address ‘precarious’ local government finances: Dan Bates crosses his fingers for “no nasty surprises” in this week’s funding settlement but argues the “bigger prize” is post-Covid financial certainty. Thursday (17 December) should be the… dlvr.it/Rnj9dG pic.twitter.com/KLKjjuBqJE

    Room151 1 month ago

    PWLB consultation: Big change on the way but there are ‘grey areas’ and opportunities: The consultation on PWLB borrowing has concluded creating a new landscape for funding property acquisition. Our experts look at the implications. Tracie Langley The… dlvr.it/RndRvJ pic.twitter.com/KEqXEBmEfq

    Room151 1 month ago

    2021: Better income outcomes?: Sponsored article: Investors should be mindful of structural challenges posed to income generation as a result of rapid thematic change. Jon Bell looks at the prospects for the coming year.[...] dlvr.it/RndRsw pic.twitter.com/TxVk8aXkMq

    Room151 1 month ago

    Capturing the ‘spirit’ of borrowing rules and a sequel for interest rate swaps: The year in treasury has been marked by a return for interest rate swaps and new rules from PWLB on borrowing for yield. Jackie Shute asks whether they will sprinkle[...] dlvr.it/RnQwv7 pic.twitter.com/it5FApdCcl

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story Capex spending no indicator of sound financial health
  • Next story Councils contradict Pickles and plan to use reserves

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we'll assume that you are happy to receive all cookies from this website.OK