A GOVERNMENT select committee has started to hear evidence about the controversial ‘LOBO’ loans taken out by councils across the country including Bolton.

The Communities and Local Government Select Committee announced the inquiry would take place on the back of the Channel 4 Dispatches programme — How Councils Blow Your Millions — which highlighted the £15 billion worth of risky, high-interest Lender Option Borrower Option loans (LOBOSs) taken out by more than 200 authorities across the country.

The Bolton News revealed last week that Bolton Council currently has nine LOBO loans, covering borrowing of £79 million — all of which were taken out between 1987 and 2011.

One of the main issues with LOBOs relates to lenders’ ability to increase interest rates and Bolton Council stressed that this has only happened on one occasion in 1990, when a loan was raised by 1.125 per cent.

While the committee has started to hear evidence about the use of LOBOs, the Debt Resistance UK group — which provided the data for the Dispatches Programme — has criticised a decision not to conduct a full public inquiry.

Joel Benjamin of Debt Resistance UK said: "Instead of a full public hearing, where evidence is scrutinised and broadcast live on parliamentary television, the Communities and Local Government Committee has allowed a situation where banks like CAPITA, ICAP, Tullet Prebon, RBS and Barclays are granted preferential treatment and will submit written evidence to the committee in private, with no scope for either forensic questioning by MP's, nor public oversight.

He added: "I fail to see how this opaque arrangement is in the interests of UK taxpayers, who are billions of pounds out of pocket as a result of LOBO loan borrowing from banks and demand answers as to why this scandal has occurred.

“Billions of pounds of taxpayer money is ultimately at stake here, with serious questions of impropriety to be answered.”

In Bolton, UKIP councillor Sean Hornby has asked the borough treasurer for a complete breakdown of Bolton’s nine LOBO loans and is seeking a breakdown of the reasons why the council has taken out these loans.