Local authorities invest billions of pounds of capital every year in their communities. The government supports this activity in part by offering low cost loans through the Public Works Loan Board (PWLB). However, in recent years a minority of councils have used this cheap finance to buy very significant amounts of commercial property for rental income, which reduces the availability of PWLB finance for core local authority activities.
To address this the government is consulting on revising the terms of PWLB lending to ensure that local authorities continue to invest in housing, infrastructure, and public services. To further enable high-quality investment by local authorities, the government is cutting the interest rates for investment in social housing by one percentage point and making available an extra £1.15 billion of discounted loans for local infrastructure projects.