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PWLB

Public Works Loan Board (PWLB)

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.

Formally, the PWLB is a statutory body of up to twelve PDFCommissioners (107 KB) 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. In practice, the PWLB function has been carried out by the United Kingdom Debt Management Office (DMO) since July 2002.

The PWLB currently operates within a policy framework set by HM Treasury. However in order to ensure the governance framework reflects this, 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 Commissioners) will be abolished and its functions will be transferred to the 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 PDFTechnical Note (48 KB)

PWLB lends to town and parish councils (in England) and town and community councils (in Wales). Applicants will need a borrowing approval from the Department for Communities and Local Government (DCLG), for which they should approach their County Association of Local Councils or, in the case of Welsh councils, the Welsh Government. PWLB also lends to drainage boards. Applicants for loans will need a 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 (mainly for capital projects) 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). The PWLB requires assurance from the authority that it is borrowing within relevant legislation and its borrowing powers.

The PWLB does not require information on the purpose for a loan. Responsibility for local authority spending and borrowing decisions lies with the locally-elected members of the council, who are democratically accountable to their electorates.

Day to day lending functions are carried out by the DMO, an executive agency of HM Treasury acting as PWLB.

Moneys are, as provided by Act of Parliament, drawn from the National Loans Fund and rates of interest are determined by the 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 does not hold any information about the purposes of local authority borrowing.

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.


*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).
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