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Responsibility for local authority spending and borrowing decisions lies with locally-elected
council Members, who are democratically accountable to their electorates. Local authorities
are required to have regard to the Prudential Code and statutory guidance when they
borrow from the PWLB or from any other lender, these are published by The Chartered
Institute of Public Finance and Accountancy and the Ministry of Housing, Communities
and Local Government and form the Prudential Framework. The main objective of the
Prudential Framework is to ensure that the capital investment plans of local authorities
are affordable, prudent and sustainable. Before it can advance a loan to a local authority,
the Public Works Loan Board requires formal assurance from the authority that the
loan is within their borrowing powers and the relevant legislation.
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