A third of your council tax in Lewisham is being spent on repaying debts

http://www.newsshopper.co.uk/news/lewisham/15571074.A_third_of_your_council_tax_in_Lewisham_is_being_spent_on_repaying_debts/

Wow. Even for Labour this is impressive.

WOW! Is the Council having a laugh?!! Why debts, where the money gone?!! What gone for?!!

Not surprisingly newshopper is late to the party. The Standard has been covering this for some time now as has other reputable media like the Financial Times. Good to see our local rag had to wait for a TV program to pick up on the story.

I gather LOBOs have been around for a while, and many local authorities were attracted to them because the rates were, and for many still remain lower than other debt such as the government Public Works Loan Board (PWLB) or long term bank loans. They have the capacity to cost much more if and when the issuing bodies adjust the rates which some have and some haven’t. In fact the largest LOBO issuer - Barclays - is converting its LOBOs to a standard fixed rate giving Councils more certainty in their debt positions. Sadly none of Lewishams LOBOs are with Barclays. Lewisham’s last LOBO loans was taken out in 2008. I suppose after the credit crunch and with super low base rate other lending products became more attractive.

Loads of councils are in this position. Even some non-Labour councils like Kingston which has higher debts with a substantial LOBO book.

I wonder with rates of 2-3% the PWLB wouldn’t help Councils shift their LOBO debt to them? Maybe its not that easy. Interesting to note that the 4th largest LOBO lender is RBS the same bank bailed out by the public purse. Now profiting from it as well.

Lots of great info here.

http://lada.debtresistance.uk/

“Debt Resistance” looks like a heavily ideological organisation.

Of course banks profit from handing out loans. A large part of the fee is a risk premium that defends the bank. Because lending money is a risky business.

The scandal here is not that banks are doing their job and loaning money when it’s asked for. The scandal is that councils are overspending and relying on the unwitting public to pay the price of private finance.

From the laughable “debt resistance” website:

81F4E5A7-9982-48BF-BB0D-E09DEDBAD0E9750×413 216 KB

Moaning about being “tricked” by banks into borrowing money so you can buy things you know you can’t afford? Laughable. Nothing but irresponsible fecklessness

There’s nothing new here Kat. Councils (not all but many) have been relying on debt for essential public services and local infrastructure. Some through lack of funds (austerity) and other through bad fiscal management, and often a combination of the two. These debts aren’t any big secret though. They are tracked by DCLG and published quarterly.

Austerity should be a national strategy of central and local govt living within their means.

“Lack of funds” isn’t an excuse to bury the public in yet more unsustainable debt.

Lack of funds is why austerity is so important.

I thought the point raised and questioned was local authorities use of LOBO for borrowing rather than other financial products. I see you have another agenda with the post. Would you be happy then if all borrowing was through central government and the PWLB? All I see is free market principles with the financial institutions as the winners and the local authorities and through them as the public as the losers.

Not the issue here though. Individual’s over-reliance on debt is something we’d agree on in another thread.

I’m not making any judgement. But if you want to see the depth of LOBO debt by Councils, then it is probably your best source of info. And as I’ve said earlier, I was responding to the article you posted. Which by the way got its information from Debt Resistance.

We all have principles that we believe in and we post opinions that support our arguments.

I’m taking a hiatus from Politicos, so you don’t need to worry about my “agenda” for a while.

I normally don’t anymore. I’ve also been taking your advice and attempting to stick to the topics as presented. I’m sorry if that isn’t working for you.

By the way my three month hiatus did wonders for my well-being and perspective. I highly recommend it.

I often think one solution is to give local government much more control in how they can raise their own finances. Though frankly I also think that London should be one unitary council without a further 32 boroughs.