Changes being consulted on will modernise lending to local authorities.
The changes being consulted on today, Thursday 12 May will create a more streamlined and up-to-date governance arrangement.
The government’s preferred option to transfer powers from the Public Works Loan Board (PWLB) to HM Treasury will secure greater accountability to ministers and increase efficiency of central government lending to local authorities. Operational responsibilities would be delegated to the Debt Management Office.
Currently, local authorities are responsible for identifying projects for which they require funding and determining how much borrowing they can afford, following the devolution of borrowing powers in 2004.
The role of the PWLB as an independent decision-making body is therefore no longer needed and the changes will bring governance arrangements in line with the current policy and operational responsibilities. Under the proposals, local authorities will continue to be able to access loans in the same straight forward was as now and the policy on rates and repayment terms will remain the responsibility of the Treasury.
Economic Secretary to the Treasury Harriett Baldwin said:
For over 200 years the Commissioners at the Public Works Loan Board have played a vital role in the ability of local government to fund capital expenditure and the construction of important local infrastructure.
As local government continues to gain further decision-making powers, it’s right that we consider whether the governance, composition and status of the PWLB is fit for the twenty-first century.
The reforms set out in today’s consultation will create a more streamlined and up-to-date governance arrangement. The government’s preferred option to transfer the functions of the Public Works Loan Board to HM Treasury, will secure greater accountability to ministers and enhance the efficiency and effectiveness of central government lending to local authorities.