Top 10 LOBO Loan Councils Refinancing Savings
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CouncilLOBO debt £
Ave interest Rate %
Annual interest paid
PWLB rate %
Alt PWLB Annual Interest Payable
Interest Savings Available
Ave Years to Maturity
Potential Total Savings
Break Fee @ 23% Face Value
Total Savings Less 23% Break Fee
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Newham563,000,0000.055309650000.0221124423001852270051944657700129490000815167700
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Kent431,800,0000.042181356000.0221954278085928204236089844099314000261584440
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Glasgow449,000,0000.046206540000.022199229001073110042450706200103270000347436200
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Leeds445,000,0000.042186900000.02219834500885550046407353000102350000305003000
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Manchester460,215,0000.0578266004270.022110170751.516429675.51219715610610584945091306656
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Cornwall393,815,0000.042916894663.50.02218703311.581913524738499354490577450294416094
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Newcastle345,061,0000.041814423549.80.02217625848.16797701.747319491979.979364030240127949.9
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Fife357,350,0000.0464165810400.0221789743586836054438207862082190500299888120
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Sheffield313,000,0000.0452141476000.0221691730072303004733982410071990000267834100
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Salford282,700,0000.0489138240300.0221624767075763603022729080065021000162269800
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Total4,040,941,0000.0468190915910.389304796.1101611114.240.840144504909294164303085034060
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i.e. £101 milion p/ai.e. £4bn over 40 years
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References
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https://www.standard.co.uk/business/council-lobo-loans-fall-away-as-rbs-strikes-refinancing-deal-with-kent-a3978061.html
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https://www.localgov.co.uk/Kent-CC-pays-back-LOBO-loan-early/46316
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http://www.room151.co.uk/funding/northants-exits-lobos-as-october-pwlb-borrowing-hits-850m/
Kent CC PWLB rate = 2.21%
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https://www.independent.co.uk/news/business/news/uk-local-authorities-could-have-been-ripped-off-by-controversial-lobo-loans-mps-say-a6947356.html
Letter to HMT calling for inquiry circa Mar 2016
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https://www.thisismoney.co.uk/money/news/article-5953973/Barclays-sued-8bn-lose-lose-loans-storm.html
14 Councils sue Barclays over LOBOs
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Assumptions/ Methodology
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Top 10 LOBO loan borrowers were selected using Department of Communities & Local Government + data on LOBO borrowing obtained via FOIA by Debt Resistance UK
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Interest rates for each council were averaged acoss the LOBO portfolio (unweighted)
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Available PWLB rate of 2.21% was used based on the deal by Kent County Council to refinance its LOBO loans in October 2018 - but is subject to daily change
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Years to loan maturity were averaged across the entire LOBO loan portfolio for each council (loans typically 40-70 years)
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Total potential savings calculated by multiplying the annual difference between LOBO loan & PWLB loan rates, and multiplying savings by years to maturity
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The Top 10 Councils With LOBOs Account for £4bn(25%) of the £16bn National LOBO Loan Debt Portfoilio. Potential savings were multiplied to give approximate national savings
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The 'breakage fee' paid by Kent County Council was 23% of the RBS loans face value. RfA argues no break fee should be paid by councils, as the loans were systematically missold. Were it payable, this would be deducted from the possible savings
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Impact of Barclays LOBO loan restructuring to fixed rate loans in 2016: As the interest rates don't change on Barclays restructured LOBOs, we have ignored this, as conversion to fixed rate was not a cash saving to the Council as per the Kent/ Northants deals. It only results in a slight reduction in fair value/ breakage cost See Nick Dunbar here: https://riskyfinance.com/2017/02/02/the-mystery-of-barclays-lobo-waiver/
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Further Localgov Cuts
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https://www.local.gov.uk/about/news/local-services-face-further-ps13-billion-government-funding-cut-201920
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https://www.manchestereveningnews.co.uk/news/greater-manchester-news/austerity-officially-over-theresa-tells-15232557
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https://www.unison.org.uk/at-work/local-government/key-issues/cuts-to-local-services/
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Poverty Denial
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https://www.huffingtonpost.co.uk/entry/brexit-minister-kwasi-kwarteng-dismisses-un-report-on-child-poverty_uk_5bf142f7e4b07573881f317b?guccounter=1&guce_referrer_us=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_cs=7NGpv0rvIyZUqR-Rhm1WWg
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https://twitter.com/Channel4News/status/1063827283662778373
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https://ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?LangID=E&NewsID=23881
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https://www.manchestereveningnews.co.uk/news/greater-manchester-news/austerity-officially-over-theresa-tells-15232557
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