The east London borough of Newham has the most bank debt in the form of LOBO loans of any local authority in the UK. Even in austerity conditions, the council is forced to make extortionate interest payments to the same banks responsible for the 2008 crisis.
Through data analysis and investigation as well as interviews with residents, charity workers and campaigners, Research for Action has put together a picture of this hidden debt crisis. Our report ‘Debt & Democracy in Newham: A citizen audit of LOBO loans’ presents details of Newham Council’s LOBO loan debt and assesses its legitimacy in detail.
LOBO loans are a “lose-lose” bet for councils, symptomatic of the power imbalances and information asymmetries between public authorities and the financial sector. They contain embedded derivatives, lurking in a legal grey area following the 1989 Hammersmith and Fulham case that banned local authorities from speculating with taxpayers money.
We have assessed the legitimacy of Newham’s LOBO loans based on the origin of the debt, its contractual terms and the impacts of ring-fenced debt servicing in the context of cuts in services.
We call this project a citizen debt audit: it is a tool for residents to address the power of big finance by shining light on how loans were made and who benefited from them. We believe this is crucial for building more accountable and democratic public authorities.[ddownload id=”537″ text=”DOWNLOAD HERE“]
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You can find a recording of the launch event here.