To ask Her Majesty's Government what is the extent and nature of the due diligence undertaken by the Public Works Loan Board before extending loans to local authorities to acquire commercial property for investment purposes.
18 February 2019
Responsibility for local authority spending and borrowing decisions lies with locally-elected council Members, who are democratically accountable to their electorates. 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, these are published by The Chartered Institute of Public Finance and Accountancy and the Ministry of Housing, Communities and Local Government and form the Prudential Framework. The main objective of the Prudential Framework is to ensure that the capital investment plans of local authorities are affordable, prudent and sustainable. Before it can advance a loan to a local authority, the Public Works Loan Board requires formal assurance from the authority that the loan is within their borrowing powers and the relevant legislation.