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Newham Council’s debt levels are still rising

A recent investigation has shown that Newham Council’s debt levels are still rising, despite the portfolio restructuring of controversial LOBO loans.

Vedanta Hedging has been working closely with Newham Council to expose the high interest rates and breakage costs surrounding LOBO loans. Abhishek Sachdev, our MD has provided extensive analysis and commentary regarding how banks mis-sold complex loans to councils in Channel 4’s Dispatches programme. He was later invited to give evidence to the Communities and Local Government Select Committee in Westminster about the complex issues with LOBO loans.

 So, what is a LOBO loan?

A complex loan that often appears cheaper than the alternatives being offered by the Government at the given time. Hence, more attractive to local councils. LOBO loans are unlike any other loan, as they contain complex derivatives and extremely high breakage costs.

Despite the increase in economic activity brought by the Olympics, Newham remains one of the poorest boroughs in Britain. In February, Newham council and Barclays Bank agreed to restructure £248.5m of LOBO loans into more conventional debt, saving residents £1.6m annually and nearly £100m over the 60-year term of the debt!

  Council tax payers should be outraged at the numbers. For Newham residents still reeling from discovering 80 percent of council tax went to bank in 2016, a staggering £33m increase in debt interest repayments this year (to 125% of council tax equivalent).

Joel Bejamin, from Debt Resistance UK,

Critics have also voiced concern regarding council’s commercial and financial activities, arguing councils have little or no experience to deal with the high risks involved. If the investments were to fail, council tax payers would inevitably pay for this mistake!

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