Yesterday the Treasury published the response to the government's consultation on revised Public Works Loan Board (PWLB) lending terms together with guidance on how the reforms will be implemented.
Accordingly, as of 9am yesterday morning the PWLB will not lend to a local authority that plans to buy investment assets primarily for yield, notwithstanding whether the transaction would notionally be financed from a source other than the PWLB.
As of yesterday local authorities that wish to borrow from the PWLB will need to submit a three year capital and financing plan confirming that there is no intention to buy investments primarily for yield at any point in the three year life of the plan.
Interest on PWLB lending is also coming down, with rates cut to pre October 2019 levels.
Cheaper lending should come as good news to authorities seeking to deliver regeneration, infrastructure and affordable housing within their administrative areas. Further guidance on implementing the new rules is expected to be published by the Treasury shortly.
It isn’t possible to reliably link particular loans to specific spending, so this restriction applies on a ‘whole plan’ basis