local authority budgets

RBS to wind down £1bn worth of contentious local council loans

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This is a potentially liberating news story for a number of rural authorities – always assuming they have the ability to pay their share of this debt down rapidly. It tells us:

Royal Bank of Scotland is aiming to wind down the remainder of about £1bn in controversial bank loans held by local authorities across the country, after criticisms that high payments have diverted cash from council services.

Campaigners have welcomed the move, which followed similar efforts made by Barclays in 2016 and comes as both lenders face a string of lawsuits.

The loans have been criticised by activists and the shadow chancellor, John McDonnell, who said councils have been on the hook for expensive interest payments that could have been diverted to local services already squeezed by spending cuts. Campaigners against the loans estimate that the cancellation of so-called lender option borrower option loans, or lobo loans, could ultimately save taxpayers £16bn over the next 40 years.

The Guardian understands that RBS is working to wind down the loan portfolio by the end of the year. The main way it is doing this is through loan redemptions: allowing clients including local authorities to pay back the loans earlier than their original contracts allowed, with some offered a discount on their repayment as an additional incentive

Pickles under attack over plan for referendums on council tax rises

In my mind you cant have a pick and mix approach to local accountability. You either choose your representatives through the ballot box or you run the country through referenda. How would Westminster feel about the need for a plebiscite every time they did anything financial? I have not met anyone in “the local Government family” who is positive about the approach profiled in the article below which tells us:

Eric Pickles, the communities secretary, is facing opposition from the home secretary, Theresa May, and the Liberal Democrats over plans to force all councils and police authorities to hold a council-wide referendum if they propose a council tax rise of more than 1%.

At present, councils are free to raise council tax by up to 2% without being required to stage a referendum. No council has taken the option, although the Green party in Brighton was planning to do so at one point.

The new threshold would leave councils facing real-terms cuts in their budgets due to inflation. Pickles had wanted to cut the referendum trigger to 1.5% for 2014-15 but pulled back.

He is planning to announce the lower threshold for 2015-16 on Wednesday, the same day as the local government finance settlement, but May has warned that police budgets are already under serious strain and it would cost police and crime commissioners £1.1m to stage a referendum if they wished to raise the police precept by more than 1%.