Does a Town or Parish Council need a public consultation before applying for PUBLIC WORKS LOAN?

Question

The Town Clerk has quoted this as the correct way for moving forward.

Answer 1

Found the process on line but when I tried to post it here I had an error message: "Your post contains too many links to external sites".  If anyone wants to do a search, it was on the NALC site and referred to annual conference 2017 presentations - access to grants and funds - Shafi Kahn and Tristram Gardner.   

I have also found this clear guide on a few council websites...  https://www.lalc.co.uk/wp-content/uploads/2019/04/EVIDENCE-REQUIREMENT-Hints-Tips-Takeaway-Note-for-Audience-MHCLG-1.pdf

Number 6 on the checklist shows the need for a survey if there is to be an increase in the precept.  It needs to be "clear and transparent, and demonstrate support for the project and how it will be funded". 

Number 7 Shows the need for public support, whether or not there is a precept rise, "or at the very least, opportunities given to residents for their views, opinions, feedback on the project”.

I have had the opposite experience. 2 petitions and a Parish Poll showed opposition to the proposed site for the building work, yet it is to go ahead with no clear opportunity given to residents for their views / opinions /  feedback on the loan needed to finance the project.

Answer 2

Yes, I believe that is the case.  Your local NALC County Association should be able to guide you on procedures but there's information online that anyone can check too.

Answer 3

Provided it meets the criteria for general power of competence, no. But it is always better to consult the precept payers.

Answer 4

An interesting reference is the DMO page:

https://www.dmo.gov.uk/responsibilities/local-authority-lending/about-pwlb-lending/

A couple of key points from front page:

(Authorities) “...They are free to finance capital projects by borrowing, provided they can afford to service their debts out of their revenues..”

“...English town and parish councils need a borrowing approval from the Department for Levelling Up, Housing & Communities (DLUHC) ..”

I’d read that as meaning a debt  should be serviced by revenue rather than precept - so GPC would be a prerequisite  

I’m not able to find any reference which requires an authority to hold a referendum though  

It might be considered as a good practice but not a necessity - unless there is a reference which states otherwise ?

. 

Comments

I read the question as "consultation" rather than referendum as such which is far more formal.  I also understand the word "revenue" to mean "precept".  Certainly when working for a council with a PWL before, that loan was paid through the precept not any other income (which the council did not have anyway).

---

Yeah, I see what you’re saying about ‘consultation’ rather than referendum - it was entirely my interpretation  that consultation would probably mean referendum since the alternative is simply to have it on an agenda and invite the public to attend the meeting....  that would be a consultation and likely result in no meaningful public participation.
On the other point - is precept revenue - the reason I considered it unlikely that the meaning of the reference was that precept could be counted as revenue was that it would be illogical to require a PC to demonstrate the ability to service a loan repayment through precept (as opposed to true income generation revenue) since all that would be required would be that the precept be set at a level sufficient to service the loan - that just seems illogical. Also, would it really be the case that a PC that DIDN’T have GPC would be of sufficient scale / experience to actually draw down against a PWL?  I guess it’s possible but must be, at best, rare?

Don’t know - it’s been an interesting thread since it caused some additional research. Can’t ever see my PC being in a position to want a PWL but interesting none the less!

Answer 5

You will require a ‘borrowing approval’ and among the questions on that form is whether the precept was increased and whether a public consultation was held.

Comments

That’s interesting - a perspective which includes steps in the process  So if there is a question in the process about whether precept was increased (presumably so as to service the loan repayment) would that be a positive or a negative in the decision making whether to award or reject the PW loan? Don’t know. It would be a bit presumptuous to increase precept PRIOR to being awarded a loan - could potentially leave a lot of money loafing in the budget / bank balance if loan application rejected.

---

My memory is that the borrowing approval form asks whether it is the intention of the council to increase the precept, if that’s the case, a consultation is required. The approval form is signed off by the (in our case) county association, then the application to the PWLB can begin. The ‘good councillors guide to finance and transparency’ is helpful to read on this subject. It’s free to download on the NALC website.