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Thursday, November 28, 2013

Labour still getting discount at the Co-op

I am a bit late with this reference but I thought it still worth mentioning the report in the Telegraph a few days ago that underlined how closely tied in Labour and Labour politicians are with the Cooperative Bank, who continue to give them favours despite their own financial troubles.

The paper says Labour's property portfolio, including Ed Balls’s constituency buildings, have benefited from cheap loans from the Co-operative Bank:

Labour Party Properties Ltd (LPPL), a property firm wholly owned by the Labour Party, has used its £6.3 million portfolio to secure £3.8 million of cheap finance from the Co-op Bank. The properties used as collateral in the deal include Morley Labour Rooms in the shadow chancellor’s West Yorkshire constituency.

The revelation raises fresh questions about Labour’s close relationship with the Co-operative Bank, whose former chairman and Labour councillor, Rev Paul Flowers, has been arrested and bailed on suspicion of drug offences. It follows the revelation the Co-op donated £50,000 to Mr Balls’s office.

LPPL paid 2.88 per cent interest on the loan, according to the company's 2012 accounts – a far cheaper rate than would typically be offered to property firms on the open market, one expert said.

If the bank had charged a commercial rate of interest, LPPL’s tenants could face significantly higher rents, he added. Tenants include the constituency offices of Mary Creagh, the shadow transport secretary, and Tom Watson, the former elections co-ordinator.

They says that the loans are channelled through the Labour Party accounts into LPPL, a subsidiary company. It owns 20 buildings across Britain, including the Morley property, which is valued at £80,000 and carries a 2007 Co-op charge:

A commercial mortgage broker who inspected the accounts said: “This is a ratbag collection of second and third-rate properties, and any of my clients would not get money at that rate of interest out of any bank on the face of the planet.

“They are paying half the rate of interest that the rest of us would pay. This is not a genuine arm’s-length transaction – it’s far too cosy. Poor little Co-op bondholders who are taking a haircut should be asking why they are doing it.”

Labour say that they are being smeared. I think the facts speak for themselves.
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