Question to the Ministry of Housing, Communities and Local Government:

To ask Her Majesty's Government whether there is an cap on the borrowing that local authorities can undertake; if so, what the basis for this cap is; and what powers they have to step in should borrowing be excessive, including through the Public Works Loan Board.

Under Local Government Act 2003, local authorities have the freedom to borrow and invest, without government consent, provided that their borrowing is affordable. As part of this ‘prudential’ framework, every local authority is required to set its own borrowing limit, which must be approved by full Council or the equivalent at least annually. The Government has backstop powers to set national borrowing limits at times of economic crisis, which would override the normal prudential freedoms. These powers have never been used.