About the PWLB

The Public Works Loan Board (PWLB) is a statutory body that issues loans to local authorities, and other specified bodies, from the National Loans Fund, operating within a policy framework set by HM Treasury. This borrowing is mainly for capital projects.

Formally, the PWLB is a statutory body of up to twelve Commissioners appointed by the Crown to hold office for four years. The Commissioners retain a statutory, quasi ceremonial role only, derived from Acts of 1875 and 1946, and the roles are unpaid. Nowadays these posts are held in order that the function of central government lending to local government complies with statute. Further information on the Commissioners is set out below. Day to day lending functions are carried out by the UK Debt Management Office (DMO) acting as PWLB.

The government recently consulted on changes to the PWLB’s governance arrangements and subsequently announced that the PWLB as a statutory body (including the statutory role of the Commissioners) will be abolished and its functions will be transferred to HM Treasury*.

  • How the PWLB mechanism works

The PWLB’s interest rates are determined by HM Treasury in accordance with section 5 of the National Loans Act 1968. In practice, rates are set by the DMO on HM Treasury’s behalf in accordance with agreed procedures and methodologies which are described in a DMO Technical Note.

PWLB lends to town and parish councils (in England) and town and community councils (in Wales). English town and parish councils need a borrowing approval from the Ministry of Housing, Communities and Local Government (MHCLG) in order to apply to the PWLB. Welsh town or community councils need an approval from the Welsh government. PWLB also lends to drainage boards. Drainage boards applying for loans need loan consent from the Department for Environment, Food and Rural Affairs (Defra).

The approvals must be in place before loan applications can be made to the DMO acting as PWLB.

PWLB also lends to major local authorities. Since 2004, major local authorities have been able to borrow without government consent, provided they can afford the borrowing costs. To this end, they are required by law to “have regard” to the Prudential Code, published by the Chartered Institute of Public Finance and Accountancy (CIPFA) and MHCLG. The PWLB requires assurance from the authority that it is borrowing within relevant legislation and its borrowing powers.

Under the current legislative and policy framework, the PWLB is a non-discretionary lender and it is not part of its arrangements to require information on the reasons for, or circumstances surrounding, loan applications or borrowing activity. The DMO’s responsibilities are for timely administration of the function within the set framework. Responsibility for local authority spending and borrowing decisions lies with the locally-elected members of the council, who are democratically accountable to their electorates.
Moneys are, as provided by Act of Parliament, drawn from the National Loans Fund and rates of interest are determined by HM Treasury.

Loans to local authorities are automatically secured by statute on the revenues of the authority rather than by reference to specific revenues, assets or collateral.

The PWLB's accounts are audited by the Comptroller and Auditor General whose reports on them are laid before Parliament.

The PWLB Commissioners

Statute requires the Crown to appoint up to 12 Commissioners (one of whom acts as Chair and another as Deputy Chair) and this process is done under normal public appointment procedures (e.g. advert on Cabinet Office website). By law, Commissioners may not be remunerated for their services. The Commissioners meet once a year to review the PWLB report and accounts that are prepared by the DMO. They have no role in the operational processes or the day-to-day management of the PWLB function and do not see loan applications.
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*The legal entity is the Commissioners of the Treasury and consists of, as a rule, the Prime Minister, as first Lord of the Treasury and the Chancellor of the Exchequer as the Second Lord of the Treasury. The Junior Lords of the Treasury are now usually government whips under the Parliamentary Secretary of the Treasury (Chief Whip).