At last some common sense is being blown into the labyrinth of council housing finance.

Currently councils collect all council rents and right to buy receipts and pass them to the treasury. The treasury then skims £200Million pounds – king of like a tax on council housing – and then passes it back as it sees fit to every council with council housing. The money it passes back is designed to fund the long term borrowing to build the council housing in the first place. Clearly this doesn’t encourage paying of council housing debts.

The proposed changes are that councils keep the rents they collect and right to buy receipts. But they have to pay the council housing debt interest and principle. The full details will come out after the Comprehensive Spending Review announced on the 20 October. It could mean Southwark borrow more based on the rental income it receives and use this borrowing to catch up with decades of under funding for maintenance. IT could build more council housing.

So this is potentially good news for councils run carefully and thoughtfully to use these new freedoms.