Question to the HM Treasury:

To ask Her Majesty's Government who is responsible for setting the credit risk budget for the Public Works Loan Board; who has responsibility for lending decisions; and when they last assessed the role of that Board in delivering public policy and fiscal management targets.

The Public Works Loan Board (PWLB) is a statutory body that issues loans to local authorities, and other specified bodies in England, Scotland and Wales. The PWLB’s policy framework is set by HM Treasury.

Responsibility for local authority spending and borrowing decisions lie with locally-elected council members, who are democratically accountable to their electorates. Since 2004, major local authorities have been able to borrow without government consent provided they can afford the borrowing costs. Local authorities are required to have regard to the Prudential Code and statutory guidance when they borrow from the PWLB or from any other lender. The Prudential Code and statutory guidance were updated in 2018 to increase transparency and accountability, and ensure that local authorities take investment decisions after careful consideration of risk and proportionality. Before it can advance a loan, the PWLB requires formal assurance from the authority that the loan is within their borrowing powers and the relevant legislation.

As with all policies, the government keeps the lending policy for the PWLB under review.