BOLTON Council has taken out nine controversial ‘LOBO’ bank loans, it has emerged.

The authority has taken out £79 million worth of the controversial loans which were highlighted in Channel 4's Dispatches programme last week.

The programme looked at the £15 billion worth of high-interest Lender Option Borrower Option loans (LOBOs) taken out by more than 200 authorities across the country.

The investigation focussed on councils in Cornwall and Newham which were being charged rates of more than seven per cent on the multi-million pound loans.

Bolton Council has confirmed that it currently has nine LOBOS which cover borrowing of £79 million.

The council arranged these loans with banks between 1987 and 2011 "in consultation with its treasury management advisors".

The Dispatches programme raised a number of issues with LOBOs including the fact that banks have the option of raising interest rates.

A spokesman for Bolton Council said that this issue has only arisen on one occasion.

He said: “The current concern around LOBOs relates to lenders’ ability to increase interest rates.

“This has only happened once on one of our LOBOs when in 1990 the rate was increased by 1.125% — all other rates, which predominantly range between three per cent and and four per cent, are as per the original agreement.”

Other issues brought to light regarding the loans include the high fees councils have to pay to change deals and the length of the loan contracts which are between 40 and 70 years.

Clive Betts, the chairman of the parliamentary committee which scrutinises local government, called for an enquiry into the use of LOBO loans.

He said: “I think the committee will want to look at this very seriously indeed.”

The Bolton Council spokesman added: “It is normal practice for local authorities to enter into loans to fund their capital programme, and with the advice of the council’s treasury management advisors, loans are entered into which provide the best possible rates available at the time the loan requirement is identified.”