The Government has pledged to modernise lending to local authorities by transferring the powers of the Public Works Loan Board (PWLB) to the Treasury.

It claims the move would increase the efficiency of lending to local government and create greater accountability to ministers.

Under the proposals out to consultation, responsibility for fixing loan rates and repayment terms will transfer to the Treasury.

‘As local government continues to gain further decision-making powers, it's right that we consider whether the governance, composition and status of the PWLB is fit for the 21st century,' said economic secretary to the Treasury, Harriett Baldwin.

‘The reforms set out in the consultation will create a more streamlined and up-to-date governance arrangement. 

‘The Government's preferred option to transfer the functions of the PWLB to HM Treasury will secure greater accountability to ministers, and enhance the efficiency and effectiveness of central government lending to local authorities.'