Question to the Department for Levelling Up, Housing & Communities:

To ask Her Majesty's Government what assessment they have made of the extent to which access to funds from the Public Works Loan Board by local authorities for the purpose of investing in commercial properties is compliant with the provisions of the Prudential Code relating to the activities of public bodies.

The Prudential Code issued by CIPFA makes it clear that local authorities must not borrow more than or in advance of their needs purely to profit from the extra sums invested. This applies to all borrowing activity, not only Public Works Loan Board (PWLB). Our guidance published in February 2018 makes it clear that this section of the Prudential Code applies to non-financial investments, such as commercial property, in the same way that it applies to financial investments. If local authorities chose to ignore this prohibition, they will need to disclose that they are knowingly disregarding statutory guidance and explain their policies in investing the money borrowed, including management of the risks, for example, of not achieving the desired profit or borrowing costs increasing.