Dispatches reporter Antony Barnett travels across the UK uncovering the financial deals between cash-strapped councils and banks that are now costing taxpayers millions of pounds a year.
In the film Clive Betts MP, the Chairman of the parliamentary committee which scrutinises local government calls for an inquiry into £15bn of risky bank loans taken out by more than 200 councils across the country.
These risky and complex loans are known as LOBOs. Some councils like Newham and Cornwall are being charged interest rates of more than 7% on tens of millions of pounds of these LOBO loans at a time when base rates are at a historic low.
Betts also called for the Financial Conduct Authority to investigate the City firms that give specialist financial advice to town halls on their borrowing.
Dispatches uncovered evidence that some council advisers were not only paid by the local authority, but earned commission from City brokers if town halls took out these risky loans. Betts described this potential conflict of interest as “outrageous”.
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