We are thrilled by Newham Council’s announcement that Barclays are turning 55% of its Lender Option Borrower Option, or LOBO, loans (worth £248 million) into a normal fixed-rate loan. It is estimated that this deal will save Newham Council £1.6 million this coming year!
The move follows years of campaigning by our team, alongside Debt Resistance UK and members of the public who uncovered the toxic debt, totaling 90% of the council’s debt portfolio. The interest payments alone equal 80% of Council tax paid from 2014 to 2015.
We are excited to finally see positive movement on this issue. This should rescue us from over a million pounds of cuts to local services and jobs this year. Newham taxpayers’ deserve to see their money spent on local services, not bank debts from mis-sold financial products.
However, we are concerned that the other 45% of the council’s LOBO loans remain unchallenged, and that full details of this new deal with Barclays have not been released. We can’t be sure that this announcement isn’t just a rewording of last year’s changes initiated by Barclays for all of their LOBOs contracts in the UK.
Rachel Collinson, Membership Officer of Newham Green Party, and Elisabeth Whitebread, the Green Party candidate in the 2016 Forest Gate North by-election, have worked closely with Debt Resistance UK since investigations started in 2014.
Speaking on behalf of Newham Green Party, Rachel Collinson said “This is a brilliant first step to reduce Newham’s debt problems. However, we will continue to campaign for further action to reduce debt expenditure from the LOBO investments with RBS.
Residents, local businesses and Council workers should not be penalised for these banks mis-selling loans to councils.”
Newham Green Party’s campaign started in 2014, following discussions with Joel Benjamin of Debt Resistance about investigating Newham’s LOBO loans.
In 2015 Ms Collinson submitted letters to Newham Council regarding the LOBO loan debt, with little in the way of constructive response. This was followed with a request to the auditors to take the Council to court over illegal spending.
In 2016 Green Party and Debt Resistance activists attended various Council meetings; providing investigation reports, and offers of no win, no fee legal advice to provide the council with a low cost solution.
In addition to the nearly 900 people who signed our petition, we would like to thank all our volunteers, members and supporters, and Newham Councillors Rokhsana Fiaz, John Gray and John Whitworth for their input and questions at some of the Council and audit meetings – often against strong resistance from other Newham Councillors.
In an email to their supporters, Ludovica Rogers of Debt Resistance UK said:
We hope this deal goes beyond a simple PR stunt for Barclays and Newham council and that risk and high costs for taxpayers associated with LOBO loans are being effectively removed. Until Newham Council put the terms of this deal negotiated in secret into the public realm, we can’t comment, in particular on loan breakage costs, interest rates and loan restructuring fees.
Debt Resistance UK would like to thank the hundreds of Newham residents who have signed the LOBOs petition and kept up public pressure on Robin Wales administration, alongside efforts of Newham LOBO loan objector Rachel Collinson
They join us in our disappointment at the poor conduct of Finance Director Lester Hudson and Mayor Robin Wales – “whose financial competence must now be called into direct question.”
We will continue to work with the brilliant Debt Resistance UK team on monitoring the council’s new deal and how the savings are put to use.