Rachel Collinson is the Green Party of England and Wales Spokesperson for Business, Energy and Industrial Strategy, known for her political and campaigning work. Since entering politics she has campaigned on several issues, most notably the use of LOBO loans by councils. She was the first resident in the UK to request that a council auditor (in this case PwC) take a council to court for ultra vires spending on LOBOs.
The government’s failed love affair with the banks is biting them in the behind, and everybody can benefit
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.
Joel Benjamin from Debt Resistance UK contacted me shortly after that with a special mission. With the help of financial journalists and experts he’d uncovered a financial scandal. He needed a resident of Newham to help ferret out further details. I was intrigued.
It turned out that Newham Council had taken out over £500m in so-called LOBO Loans. The annual repayments on these dreadful financial products are over £50m – coincidentally, the same amount that the council must slash from its budget by 2019. And the same as 80% 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 are locked in for up to seventy 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 have now converted their LOBOs into fixed rate loans because of our campaign. This is a great first battle won, but the war still goes on. We don’t know the details of those new contracts yet – similar problems could remain. And Newham still has £250m of LOBOs to get rid of.
If you want to check whether your council has these loans, go to lada.debtresistance.uk
Then there are two next steps. Either you need to ask the council’s auditors to prepare a public interest report on the loans, or you can ask them to take the council to court for illegal expenditure. The second option is the one I took, as a resident of Newham. It’s important to get at least one or two councillors on your side for this one. Thankfully, here, despite the fact there is no opposition (100% of Newham is represented by Labour or suspended Labour members!) we had three councillors willing to risk deselection to help out.
Make sure that you write to the local press to tell them about these LOBOs, and how much they are costing the council. Spread the word on social media. Local anger is important.
Finally and most importantly, a “no-win, no-fee” legal firm want to help councils challenge the banks in court for mis-selling. It is your job to help persuade the councils that they will benefit from joining in with this class action lawsuit. Once we have two or more councils on board, we can go ahead.
Join with us and let’s get billions back from the banks!
The featured image is from Debt Resistance UK’s facebook page.