| |
SALFORD CITY COUNCIL HAS STAGGERING £53MILLION INTEREST PAYABLE ON LOANS
|
|
Star date: 16th July 2019 SALFORD COUNCIL INTEREST ON BORROWING, PFI AND LOBO HITS £53MILLION TO BE TAKEN FROM FRONT LINE SERVICES – AS BODDAN LODGE FACES AXE FOR £15,000 Salford Council's interest payable on borrowing for things like office blocks and the RHS Garden, PFI costs for new schools and sorting out dodgy LOBO loans mushroomed from almost £33million in 2017-18, to over £53million in 2018-19. The Council confirmed to the Salford Star that "Interest payments are always a revenue charge". In other words, this money is taken from the budget for front line services, including the measly £15,000 the Council wants to axe from the Boddan Lodge Over 60s Club. Full details here...
|
.jpg)
.JPG)
click image to enlarge
|
Tomorrow morning, Wednesday 17th July, at 9am, pensioners from the Boddan Lodge Over 60s Club in Monton will be protesting outside Salford Civic Centre to try and save their existence (see here). The Club is a lifeline for many elderly people who dance, play bowls, keep fit and socialise, and for some is the only chance they have to stave off loneliness and isolation. The Council wants to axe its grant to save, effectively, a measly £15,000... ...Meanwhile, the latest Salford Council accounts for 2018-19 show a staggering £53,389,000 for 'interest payable and similar charges' alone; up from £32,968,000 the year before. These charges include interest on borrowing for the Council's big prestige projects like posh office blocks at New Bailey and the £72million Embankment, and the £19million RHS Garden in Worsley. The interest on these loans for 'capital' projects is taken from the 'revenue' account which pays for front line public services – and that grant for Boddan Lodge which the Council wants to cut. The contrast couldn't be starker - The shiny new Salford that the Council wants to build and portray versus a decent life for those who slogged in the 'old' Salford and now deserve a respectful retirement. The Council would, no doubt, argue that its prestige buildings and gardens will bring in a future revenue for the city – but the Boddan Lodge people won't be here to see it and, if the Council gets its way, will be suffering in the meantime to pay for it. It's a shocking and staggering indictment of the current claim to be an 'Age Friendly City'... Under the 'right to inspect' Salford Council's accounts, the Salford Star requested a breakdown of the £53million interest charges, and a confirmation that the amounts were to be taken from the revenue account... "Interest payments are always a revenue charge, albeit that premiums and discounts are chargeable over a period of time" responded the Council's Chris Hesketh, Head of Financial Management. The breakdown for the £53,389,000 interest charges for 2018-19 are... Interest paid on general borrowing £16,216,000
PFI finance cost £17,292,000
Premium payment £21,264,000
Residuary body interest £271,000
Set against this is interest received by the Council on loans to the airport of £1,652,000, giving the total figure of £53,389,000. The Council accounts chief states that the increase in interest charges – up from £32,968,000 the previous year – "is mainly attributable to the premium (or breakage costs) paid by the Council in respect of the termination of an 'inverse floater' LOBO loan" (£21.264million). LOBO loans were the dodgy staggeringly high interest rate loans taken out by the Council years ago which have drained resources ever since... "Most of this charge to the comprehensive income and expenditure statement is reversed in the movement in reserves statement in accordance with the accounting policy described in note 2 x in the accounts" states Chris Hesketh "This is to ensure that the costs are not chargeable to revenue (and hence council tax payers) immediately, but instead are spread over what would have been the remaining life of the loan. "The remaining 18/19 charge to revenue for the premium is £0.188m (part year)" he tries to explain "Aggregating the annualised premium charge with the interest savings to be achieved each year over the remaining loan period (estimated on the swap rate curve at the point of redemption) results in an overall net revenue saving in excess of £400,000 per annum (full year), reducing the need for cuts to council services. "The PFI finance cost is the element of the annual PFI unitary charges notionally analysed as interest charges in accordance with the accounting policy described in note 2 xix in the accounts" he adds "In reality, there is no borrowing connected with these schemes. "Proper treasury management practice is to manage cash flows, debt and investments as a whole, so it is not possible to analyse the interest on general borrowing as relating to any specific capital scheme or other activity" he insists "You asked whether interest was a revenue or a capital charge. Interest payments are always a revenue charge, albeit that premiums and discounts are chargeable over a period of time, as described earlier, in a similar manner to the revenue impact of capital expenditure." While that explains it all in 'plain English', the fact remains that the Council's spending on big capital projects is, in the short term, having a massive effect on its revenue budget – including the 'need' to axe a £15,000 grant to Boddan Lodge Over 60s Club and other front line services...
* Meanwhile, Salford Council's Director of Service Reform, who is responsible for things like finance, HR, strategy, revenues and benefits, is in line for a huge pay hike with a new title of Strategic Director for Service Reform.
In a report, the Council states that her "remit and role has broadened" and thus her pay scale should be moved to the £107,140 to £122,859 band. Last year the Director of Service Reform trousered a basic salary of £103,544 (£123,419 including employer pension contributions).
|
|
|
|
joseph O'Neill wrote
at 09:23:30 on 26 July 2019 |
|
|
| Ray as the Union bit hit a nerve? So I am a union hater not bad seeing I was a shop steward, Right wing Bigot and the host of disgusting things you send to my blog. On the other hand I could be a raving nutter feared to put my name to my ramblings, filling the star with reams of bitter shite, I really think you need some form of help, Steve is sick of this crap filling is pages and I work for a living and have little time to keep responding to your ramblings. |
|
|
?
|
Rayofsunshine wrote
at 16:14:54 on 25 July 2019 |
|
|
| Joe,your latest bitter rant exposes you as anti union bigot - "how dare the hoi polloi question their betters"! What unifies the whole of your disgusting,unprincipled political career is a visceral hatred of organised labour and a desperate
desire to lick the behind of the Tories (even though they wouldn't touch you with a bargepole!) |
|
|
?
|
joseph O'Neill wrote
at 07:56:08 on 24 July 2019 |
|
|
| Ray would we even have a clue that you attended due to the fact you fear to even offer your real name. 20 years! you've been fighting cuts that long? what in your union position? Funny thing still sticks in my mind about your campaigns unless you where a left wing Trot able to carry a banner, with the same 12 people,those who turned up for the Stars pictures outside the Town hall ON A REGULAR basis no one would listen to you, perhaps if I had offered to sell the socialist worker I mean that seemed the most read. I remember my first foray with your beloved Labour two weeks into the job agency Bin men treated like Dockers queuing for work your Labour Councillor bottled it presenting the petition at council it was left to me, The Rubbish Union representation of one cook going to be sacked it was me who fought to keep her job, Housing, funding local clubs, Green space, Walking the estates with the local police, setting up residents groups, and more, Give us your CV, call me a Tory call me what you want but at least I have a record to fall back on , You? hiding behind your mask time and time again. |
|
|
?
|
bob the regular wrote
at 17:17:16 on 23 July 2019 |
|
|
| Cody, thanks for the info on european trains. It just shows how smart this european mob are. They have not learned any lessons at all about rail privatisation from the fiasco we have here. our trains are a first class cockup compared to the second class cockup we used to have when British rail ran them. We should have flogged the whole system to Swiss rail when we had the chance 25 XXXXXXX years ago.
|
|
|
?
|
Rayofsunshine wrote
at 17:16:49 on 23 July 2019 |
|
|
| Joe,I reiterate,never did your name come up in any anti cuts campaigns that I participated in the last twenty years! Where were you in the campaign to protect home-to-school transport or respite care for
carers ?
The bald fact of the matter,Joe,is that you were and still are,a right wing Conservative masquerading
as "a disappointed Liberal". You left the Lib Dems not because of austerity,but over the party's support for the E.U! Why won't you level with people
about your true political leanings? |
|
|
?
|
Rayofsunshine wrote
at 17:15:48 on 23 July 2019 |
|
|
| Wonders never cease - Felsey has risen from the grave! What mad cap financial strategy is he going to come up with - selling belly button lint? |
|
|
?
|
Rayofsunshine wrote
at 17:15:01 on 23 July 2019 |
|
|
| Cody, the EU is fundamentally a Social/Christian Democratic Enterprise - it attempts to balance the interests of the market with those of workers and citizens!
The real Neo Liberals are Brexiteers, such as Jakob Rees Mogg,who want to use Britain's departure from Europe as a pretext to relaunch Thatcherism ! |
|
|
?
|
Mr Brexit wrote
at 17:14:47 on 23 July 2019 |
|
|
| Hey ray, is this how your socialism works, sounds great.
Bernie Sanders Mocked For Admitting He Will Have to Cut Staff Hours to Pay Them $15 Minimum Wage
Well, this is awkward.
Published 15 hours ago on 22 July, 2019
Paul Joseph Watson
Bernie Sanders was mercilessly mocked after he was forced to cut the hours of staffers who demanded the $15 dollars an hour the socialist Senator is campaigning for.
Sanders’ campaign staffers are putting in 60 hours a week, which makes their pay equivalent to $13 dollars an hour.
However, the unionized staffers asked campaign manager Faiz Shakir to boost their pay to $15 dollars an hour to match the pay level Sanders has advocated for.
This forced Sanders to reduce the number of hours staffers work to 42 or 43 each week.
The socialist Senator was mocked for proving his own minimum wage utopia doesn’t work in reality.
“For the first time in his life, socialist Bernie Sanders practices economics and buddy the results are hilarious,” joked Stephen Miller.
Why won’t millionaire Bernie Sanders who owns 3 homes, instead of cutting hours, pay his staff a living wage? People
Bernie Sanders' 2020 campaign will limit working hours for organizers to guarantee $15 minimum wage
For the first time in his life, socialist Bernie Sanders practices economics and buddy the results
“So does this fall under the category of hypocrisy, irony, or poetic justice? All three? Can’t make this stuff up,” tweeted Texas Republican Rep. Dan Crenshaw.
Bernie Sanders' unionized staffers clash with campaign over guarantee of $15 an hour
Sen. Bernie Sanders is a staple on the front lines of the labor fight, leading the charge in Washington and around the country to raise the minimum wage for workers to $15 an hour. But within his own...
“The rules of economics exist, even within the campaign of a socialist!” remarked Kimberley
Bernie Sanders campaign announces it will cut hours to pay staffers $15 minimum wage, prompting...
Democrat presidential candidate Bernie Sanders announced this weeked he would cut staffers' hours so that they would effectively be paid a $15-an-hour minimum wage -- prompting mockery from critics...
Despite Sanders admitting that a welfare state simply doesn’t work with open borders, he still appears to believe in the sacred progressive cow of the $15 minimum wage.
Maybe this embarrassment will force him to take another look |
|
|
?
|
Cody wrote
at 04:59:34 on 23 July 2019 |
|
|
| Rayofsunshine - The EU is a neoliberal organisation, and yet you want to remain as part of it? For instance the EU is introducing the ‘Fourth Rail Package’ which will, by law, open up public rail companies in member states to private competition in 2023. |
|
|
?
|
Felsey wrote
at 04:58:26 on 23 July 2019 |
|
|
| Stop the contra attacks and stick to the facts. Is Salford Council facing the cliff edge and how can we help stop that happening? Our City deserves our collective brains right now. |
|
|
?
|
Rayofsunshine wrote
at 18:14:33 on 22 July 2019 |
|
|
| Mr.Brexit,what is bankrupt is Neo Liberalism,an economic model that you enthusiastically support!
In the space of forty years,Neo Liberalism has reduced Britain to the status of a third rate basket case. |
|
|
?
|
bob the regular wrote
at 21:12:00 on 21 July 2019 |
|
|
| Yes arnold I know what happens. The administrators come in and provide the essential services, but they spend the cash wisely. What do we get in Salford above the legal minimum ? not much. All the people owed money from the council will get nothing. the contractors who trusted the council will get balls all. its tough luck, these people have made millions over the years out of our spendthrift councilors. |
|
|
?
|
joseph O'Neill wrote
at 05:25:25 on 21 July 2019 |
|
|
| Ray
Be Honest with the people on the site and admit you have serious problems, you attack anyone and every thing, your latest outburst seem to be targeted at Paul Wilson. Absentee Cllr no one in the Anti cuts movement knew me!! You talk the biggest load of shite ever, try the internet type in the name and you will find plenty of pictures one on the steps of the town hall holding a bloody banner. Helping people fight eviction etc pass on your email I will send the bloody photos. Ask Steve I was with him at one eviction taking pictures which I had to edit due to the people who should have been working at the council!! I have a record of all the people I helped and you? to busy on your bloody keyboard lacking the balls to even put out your real name. You should and must seek medical help or try Valium, |
|
|
?
|
Mr Brexit wrote
at 14:19:57 on 20 July 2019 |
|
|
| So ray your admitting that Salford is bankrupt and the Salford Labour Party is to blame for it. The utopia of socialism, the reality is bankruptcy and poverty for the people. We’re seeing the boom in Salford for the privileged, soon we’ll see the bust, which the poorest will pay for, as we saw under Labour and Gordon brown with the banks on 2008, Gordon brown, no more boom and bust. |
|
|
?
|
Rayofsunshine wrote
at 14:18:45 on 20 July 2019 |
|
|
| Joe,how is it whilst you were an absentee councillor you never made your "expertise" available to the anti cuts movement in Salford or that nobody in the anti cuts movement knew about your so-called alternative budget ?
I only became aware who you were when you made racist comments to the M.E.N!
Privately and looking at the contents of your blog,it is clear that you support cuts in council services - to pretend otherwise would be rank hypocrisy! When are you going to come straight with
the people of Salford,Joe? |
|
|
?
|
Rayofsunshine wrote
at 12:48:08 on 19 July 2019 |
|
|
| Bob the regular,what happens when cities go bust?
I'll tell you what happens,the most vulnerable suffer and social justice falls by the wayside.
Obviously such a prospect doesn't worry a macho loudmouth like yourself but most citizens don't want
Salford to go bust. Unlike you,Bob the regular,most
people haven't fallen for "the charms" of the Tory minimal state!
|
|
|
?
|
Arnold Rimmer wrote
at 12:47:58 on 19 July 2019 |
|
|
| @bib the regular. You are right about government administrators coming in but you are definitely wrong about the debt. Central gov admins have to reclaim the money and to reduce the debt by cutting Council services to the legal minimum...so no more free child care, reduced recycling collections, no litter picking, less gardening, no small business rate temporary exemptions etc.
It would be a disaster for everyone.
See Liverpool Council in 1983 for what happens. |
|
|
?
|
joseph O'Neill wrote
at 17:33:21 on 18 July 2019 |
|
|
| Funny when I got into using the net I came on the word Troll, unsure I thought of a mythical object not believing it would relate to Ray. Ray believes in Ray and the left wing political shite that Corbyn and his disciples peddle. Everything in the political spectrum as long as it red is the truth. I sat on the Budget group and like many here on the star was amazed at what floats to the surface, He says I quote from Wikipedia well the text came from one of the excellent officers that help guide poor souls like me thrown in at the deep end. I was grateful for the help if he would like to see the two budgets I produced I still have them, you enter on a learning process and at the end still make mistakes but were Human not Corbyn clones, Ray people must be getting seek of your negativity and the use of the race card I am. You have got on the Pot so go or get of and give others a chance. |
|
|
?
|
bob the regular wrote
at 17:32:51 on 18 July 2019 |
|
|
| What does Ray think happens when a city goes bus? do they send the bailifs round to citizens houses to make them pay the councils debt?do they bollocks. What happens is they send a government administrator round to run things. The councillors are all got rid off, and the debt wiped out, just like what happened in detroit. Now that city is on the up, just like ours could be. |
|
|
?
|
Rayofsunshine wrote
at 11:41:14 on 18 July 2019 |
|
|
| Bob the regular,"I hope the city will go bust. It won't affect us!" What planet is this bozo from? Bob
the regular knows the price of everything but the value of nothing !
Joe O'Neil,it's good to see he knows how to use Wikipedia. Joe decries the corrupt practices of Finance Capitalism but his real politics is to promote the interests of the bankers! He achieves this by peddling cynicism combined with out-and-out racism! |
|
|
?
|
Mr Brexit wrote
at 08:31:50 on 18 July 2019 |
|
|
|
joseph O'Neill, thanks for the information, it’s a pity we still don’t have caring councillors, instead of the labour self serving ones we have now. |
|
|
?
|
bob the regular wrote
at 08:31:32 on 18 July 2019 |
|
|
| Joe explains the madness of the tricks our nutters get up to. Even the dearest public works board loans are only 1.59 per annum interest. this loan oeganisation was set up by governments, labour and tory to make it easy for councils to get cash. You just fill in the forms and you get your cash. for any council to get involved with this money market nonsense is just plain daft. Even the big tricky gangster bankers make huge balls ups time to time with this one. like i said ,the sooner this city goes tits up the better. It won't affect us,but the ones that did it will be in the shit.It looks to me like they are running a huge ponzi scheme. |
|
|
?
|
Ben Johnston wrote
at 19:34:38 on 17 July 2019 |
|
|
| This goes MUCH higher than Local Government I am afraid. The horrors of Capitalism in plain view for all to see; And yet, we let them get away with it again and again. The people need to rise but we are almost certainly too reliant on their systems. Get the Tories out, it is the only hope. |
|
|
?
|
PAUL DELVE wrote
at 19:33:09 on 17 July 2019 |
|
|
| Salford council..Not fit for purpose!..All councils should be abolished as ALL seem inept at pretty much everything they touch!.. |
|
|
?
|
wrote
at 19:32:51 on 17 July 2019 |
|
|
| unfortunately this goes WAY higher than Local Government. The horrors of capitalism in plain sight for all to see. |
|
|
?
|
joseph O'Neill wrote
at 19:31:38 on 17 July 2019 |
|
|
|
LOBO stands for Lender Option Borrower Option.
A LOBO loan is typically a very long-term loan – for example 40 to 70 years.
The interest rate is initially fixed, but the lender has the “option” to propose or impose, on pre-determined future dates, such as every 5 years, a new fixed rate. The borrower has the ”option” to either accept the new rate or repay the entire loan.
If the local authority chooses to repay the loan early (for example to access a cheaper rate loan elsewhere) it would need to pay a “break penalty” to exit the loan, which given the pricing of derivatives in the contracts can cost multiples of the original loan principal.
The starting interest rate of a LOBO loan is usually quite low, designed to undercut PWLB loan rates, and is known as a “teaser rate”.
Due to the complexity and “optionality” of the contracts, the overall interest rate of the loan is difficult to price over the long term, without sophisticated pricing tools that the majority of Local Authorities will not have direct access to.
Analysis of LOBO loan contracts shows that some Councils are facing 7-9 % interest rates, which is more than twice the current rate of lending at the PWLB.2
With LOBO loans, Local Authorities are replacing safe fixed rate 50-year loans from Central Government with new variable rate loans that could end in 5 years time and need to be repaid in full. This creates a significant refinancing risk for Council that could have drastic effects in the present context of recent austerity cuts.
The Issue is one of a Council that leads without opposition I sat on budget for four years and Lobo loans stood out as an issue along with PFI, but apart from raising concerns what more could anyone do without numbers and a ruling group that fails to listen. As a Councillor on opposition benches you have to go through the process of a sham budget but apart from wasting you breath trying to highlight the issues nothing is done, i also blame a Media within the city who care little and an electorate that cares even less. The Star does it's job but sits sadly fighting a losing battle against a Labour machine that puts a finger up to anyone or anything it perceives anti. |
|
|
?
|
Rayofsunshine wrote
at 19:31:08 on 17 July 2019 |
|
|
| "These people are a disgrace" - so says,Rossi,renowned expert on International Finance and layabout to boot! |
|
|
?
|
bob the regular wrote
at 15:31:22 on 16 July 2019 |
|
|
| I will never ever understand the mad mad accountancy systems that government departments and local authorities (not just our lunatics) work to. I am told by qualified accountants in the private sector that they don't understand it either. So if these guys don't understand it, there is no chance for me. However, I can see a worsening situation here,if the interest amounts being paid are going up, and the Bank of England rate is static, and the margin above it that local authorities pay is static, it can only mean one thing, that the debts are increasing. The sooner this City is bankrupt, the better. |
|
|
?
|
ROSSI wrote
at 15:30:42 on 16 July 2019 |
|
|
| These people are a disgrace. They could have got a loan from the Central Bank. Instead they went to private banks. What a bunch of inept morons. What I would like to know is how much of what people pay in council tax goes towards the interest payments on the clowncil's lobo loans. As a percentage, what is it, fifty pence in the pound? Sixty? Seventy? How much? |
|
|
?
|
|
|
|
|
.jpg)
.JPG)
.jpg)
.jpg)
.jpg)
(3).jpeg)
.png)
(1).JPG)
