Those Resposible for KCC’s LOBO’s.

A decision to borrow money must be taken by the full Council. At KCC that is no different, once the decision has been voted on and signed off it may borrow from any willing lender.

As the average councillor is not a financial expert, to support financial decisions, regarding borrowing and investing, KCC used ‘independent’ advice from the financial sector, through firms known as Treasury Management Advisers (TMA), were mainly Butlers.

Advisers on LOBO's

KCC’s main TMA was Butlers between 2004 and 2011and their fees were a little over 1 million pounds see here.

Once KCC had obtained the funds , it was allowable under the conditions of the Loan to invest the funds for up to three years before committing them to the relevant capital project for which they were borrowed. During this time did KCC put the funds somewhere until they were called upon, and with which financial institutions did they invest to maximise returns?

Given the high brokerage commissions paid to Butlers when KCC borrowed from banks, it is hard to believe that LOBO loans were recommended with the interests of Kent taxpayers in mind. You can see the amounts of the LOBO’s and the fees charged here → KCC LOBO’s & Fees

Council’s can borrow money from 2 sources: Privately eg from any Bank or from the Public Loans Works Board.

The Public Works Loan Board (PWLB) offers two types of loans:

  • Fixed rate loans, for which the maximum repayment period is 50 years and on which the rate of interest is fixed for the duration of the loan. Repayments for fixed rate loans are due at half-yearly intervals.

  • Variable rate loans, for which the maximum repayment period is 10 years, and on which the rate of interest may be varied at one, three or six month intervals. Repayments are made at intervals corresponding to that selected for the variation of the rate. Once an interval is chosen, it remains unchangeable throughout the life of the loan.

However, KCC chose to borrow privately and did so in the form of a LOBO; which stands for “Lender Option Borrower Option. Just think of it as a long-term loan – for example 40 to 70 years. The interest rate is initially fixed at a low rate, but the lender , The Bank has the “option” to propose or impose, on pre-determined future dates, such as every 5 years, a new fixed rate. The borrower( KCC) has the ”option” to either accept the new rate or repay the entire loan. The starting interest rate of a LOBO loan is usually quite low, designed to undercut PWLB loan rates( see above), and is known as a “teaser rate”; which is an introductory interest rate charged during the initial stages of a loan. The rate is not permanent and after it expires a normal or higher than normal rate will apply.”

Now one of the things you may not know or even realise is that Local Government finance is completely unregulated by the Financial Conduct Authority (FCA) and Prudential Regulatory Authority (PRA). However The FCA consider Local Authorities to be “sophisticated” borrowers. What that means is that Councils are expected to have the necessary experience and knowledge to fully understand complex financial risks when borrowing and investing public funds.

Since the Local Government Audit Commission ceased to exist as of March 31 2015, there is no effective scrutiny of Council financial decisions by Government. The Audit Commission was the only independent government body directly responsible for scrutinising council spending activities.

Audit work is now undertaken by the National Audit Office and primarily the big 4 accountancy firms (Deloitte, EY, PwC, KPMG) who have proven countless times to act in the interests of their City of London, fee paying clients, rather than the taxpaying public.(Just read Private Eye)

So who were/are people at KCC who are/were responsible for LOBO’s

  • Chief Executive who advises on policy, procedure and legislation

  • A Monitoring Officer who advises on the legal framework in which the Council can operate

  • A Section 151 Officer who monitors the financial affairs of the Council

  • All Cllrs in office between Dec 2004 – Aug 2011

  • Butlers and ICAP

Relevant responsibilities of the Section 151 Officers’s role are:

  • Advising on corporate risk, including safeguarding assets, risk avoidance and insurance

  • Ensuring there is an effective internal audit function

  • Assisting management in providing effective arrangements for financial and performance scrutiny

  • Securing effective systems of financial administration, such as income collection and payment systems

  • Securing effective arrangements for treasury management, pensions and trust funds.

  • Advising on anti-fraud and anti-corruption strategies and measures.

So who were these people at the time the LOBO’s were taken out?

Well KCC Chief Executive was Paul Gilroy,

The monitoring officer from 2006 onwards was Geoff Wild according to his Linkedin Page.

and the The s151 officer was Lynda McMullan and Nick Vickers, Head of KCC Financial Services at the time.


Ms McMullan now works for the Met Police according to her Linkedin page and Mr Vickers continues as head of Financial Services and also as a board member for Gen2 a KCC Company. Mr Wild has left KCC. 

Lets not forget the role of our dear elected Cllrs many of whom placed there hands in the air to allow the LOBO loans between 2004 and 2011 see the KCC Election Results 2005 & 2009

And finally the Tresaury Management Advisers Butlers/ICAP who reaped a pretty penny or two from KCC and the Kent taxpayer.

The Shepwayvox Team

For more on the LOBO Series see: Going Loco About LOBO’s  &  Leader of The Pack

A big thank you goes to Joe Benjamin, DRUK, and Rob Carver



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1 Comment on Those Resposible for KCC’s LOBO’s.

  1. I wonder if someone will find a note written in coloured crayon in Carter’s desk saying “I’m afraid to tell you there’s no money left”

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