COMMONS

Local council bank loans examined following Dispatches programme

15 July 2015

The Communities and Local Government Committee examines the evidence presented on the Channel 4 Dispatches programme of Monday 6 July 2015 regarding local council lender option and borrower option loans.

Witnesses

Monday 20 July 2015, Thatcher Room, Portcullis House

At 4.00pm

  • Mr Antony Barnett, Reporter, Channel 4 News and Current Affairs
  • Mr Abhishek Sachdev, CEO, Vedanta Hedging Ltd
  • Mr Rob Carver, Former Derivatives Trader, Barclays Capital

Background

On 6 July 2015, a Channel 4 Dispatches programme revealed that many Local Authorities had taken out loans from banks for which Councils were paying high interest rates and which many Councils were locked into because of expensive "break" clauses.

The report suggested that up to one fifth of Council borrowing was taken out under such Lender Option, Borrower Option loans for which interest rates were over 7% in some cases. Most of these loans were taken out between 2003 and 2011 when Councils believed interest rates would remain high. The Dispatches programme estimated that banks made more than £1bn in upfront profits on local authority loans.

The Committee questions the people involved in the making of the programme, exploring how Councils have allegedly ended up with £15 billion in complex bank loans with high interest rates and difficult exit clauses.

Further information

Image: iStockphoto

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