Revealed: Wolverhampton council loans to cost £270 million
Bank loans taken out by Wolverhampton council are going to cost taxpayers more than £270 million to repay - with interest at £4 million a year.
Between 2002 and 2006 the council took out 21 long term loans worth a total of £93.8m.
But because of inflation rates and interest the council are projected to owe £273.8m, almost three times as much as they originally borrowed.
The figures relate to a series of Lender Option Borrower Option (Lobo) loans the council took out which have interest rates between 3.6 and 4.95 per cent, a Freedom of Information Act request revealed.
The most expensive individual loan was for £7m from Luxembourg-based Eurohypo Europaische Hypothekenbank SA, which is now going to cost the council £19.4m to pay back, £3.1m of which has accumulated over 11 years.
A total of 12 of the 21 long term loans taken out have been with Barclays, meaning the council will owe them £148,900,000.
Alex Wild, research director at the TaxPayer's Alliance, accused the council of 'irresponsible financial planning' which he said is impacting on 'the next generation'.
He said: "The staggering repayment bill in the long term shows how dangerous it is for councils to simply kick the can down the road.
"There's no excuse for this kind of irresponsible financial planning that leaves the next generation with an extraordinary bill.
"We have to get our finances in order or this debt timebomb will only become more explosive."
But Wolverhampton council leader Roger Lawrence defended the council's long term loans, saying that all local authorities have to borrow money and that Wolverhampton had secured competitive interest rates.
He said: "All our Lobo loans are about 3.6 to 4.5 per cent interest which is highly competitive.
"This is like taking out a mortgage and when you add it up it looks like a lot of money.
"The council has assets it needs to maintain and it also needs to invest.
"A lot of these investments are externally funded or are helped by the Government's supported borrowing scheme.
"An example of this is the new i10 building by the bus station, which we will probably rent out once it's built to repay the debt.
"I would guess that 60 per cent of these Lobo loans are supported in some way.
"It looks like our deals are OK, whether there's a sting in the tail to come we'll have to wait and see."
The council is axing 2,000 jobs to save £134 million over five years.
