The Public Works Loan Board (PWLB) lending facility is operated by the UK Debt Management Office (DMO) on behalf of HM Treasury and provides 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 for capital projects.
Summary of Council Borrowing
This document provides comprehensive guidance for parish and town councils in England seeking borrowing approval. It outlines the necessary steps and documentation required for the application process. Key elements include:
1. Application Process: Councils must submit a borrowing application form to their local County Association, regardless of membership status. The application should include a full council meeting minute, current and next year's budgets, a full report or business case, and evidence of public consultation and support.
2. Approval Criteria: The Secretary of State considers various factors, such as the purpose of borrowing (which must be for capital expenditure), the council's financial planning, and the extent of public consultation. Borrowing should be for a minimum of £5 multiplied by the number of local government electors unless special conditions are met.
3. Public Accountability and Transparency: Councils must ensure transparency in their dealings, providing residents with access to project details and borrowing plans from an early stage. Evidence of public support is crucial, especially if increasing the precept to fund borrowing.
4. Borrowing Approval: Approval specifies the maximum amount, purpose, and repayment period. Councils must notify the Department for Communities and Local Government (DCLG) if they do not use the full amount approved or no longer need the approval.
5. Borrowing Limits and Sources: Typically, councils can borrow up to £500,000 in a single financial year. For amounts above this, phased approvals may be issued. Funds can be obtained from the Public Works Loan Board, clearing banks, or other sources, but approval must be in place before arranging a loan.
6. Financial Prudence: Councils are advised to use balances prudently, consult residents, and ensure borrowing does not exceed the life of the asset.
7. Legal Framework: The guidance reflects the legal framework as of 1 April 2015, under the Local Government Act 2003.
Source: LEGAL TOPIC NOTE 55 issued on 7 October 2015.