About PWLB lending

The 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.

Prior to 25 February 2020 PWLB loans were provided by the Public Works Loan Commissioners.  Following a government consultation in 2016 the Public Bodies (Abolition of Public Works Loan Commissioners) Order 2020 abolished the Commissioners and transferred their statutory powers to HM Treasury*.

HM Treasury is responsible for the lending policy and for setting interest rates for PWLB loans and can be contacted by email at pwlb@hmtreasury.gov.uk. The day to day lending activities including advancing new PWLB loans and collecting repayments are delegated to the DMO. The DMO’s responsibilities are for timely administration of the function within the set framework.


How PWLB lending works

The terms and arrangements for borrowing are determined by HM Treasury and set out in the Lending Arrangements for PWLB loans which are available on the DMO website. Interest rates for PWLB loans are also determined by HM Treasury in accordance with section 5 of the National Loans Act 1968. The interest rates are calculated and published by the DMO on HM Treasury’s behalf in accordance with agreed procedures and methodologies which are described in a DMO Technical Note which is available on the Technical Notes page of the DMO website.

Major local authorities (e.g. metropolitan, borough, county, city and combined authorities) may take out PWLB loans. Since 2004, under the prudential regime, major local authorities are responsible for their own financial decision making. They are free to finance capital projects by borrowing, provided they can afford to service their debts out of their revenues. In deciding how much debt is affordable, major local authorities are required by law to "have regard" to the Prudential Code, published by the Chartered Institute of Public Finance and Accountancy (CIPFA), but have discretion to decide how to fulfil this statutory requirement.

Decisions over which capital projects to pursue and whether to borrow for these investments are the responsibility of the elected Council of each local authority, who are accountable to their electorates. Local authorities are free to borrow so long as the finance director is satisfied that they are acting in line with statute and can afford to repay the loan. The PWLB is a non-discretionary lender: it does not ask the purpose of a loan, as this would duplicate the decision-making structures of the individual local authorities.


Minor local authorities such as town and parish councils (in England) and town and community councils (in Wales), may also borrow from the PWLB. English town and parish councils need a borrowing approval from the Department for Levelling Up, Housing & Communities (DLUHC) formerly the Ministry of Housing, Communities and Local Government (MHCLG) in order to borrow. Welsh town or community councils need an approval from the Welsh government. Drainage Boards also have access to PWLB loans. Drainage boards applying for loans need the consent of the Department for Environment, Food and Rural Affairs (Defra). For all these borrower categories, the approvals must be in place before loan applications can be made.

By statutory provision, loans to local authorities are automatically secured on the revenues of the authority rather than by reference to specific revenues, assets or collateral.

Moneys are, as provided by Act of Parliament, drawn from the National Loans Fund.

The Accounts of the PWLB lending facility are audited by the Comptroller and Auditor General whose reports on them are laid before Parliament.


* 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).