Southwark Council was created in 1965 from smaller morel local council authorities. It embarked on a hugely ambitious council housing programme. It built massive estates such as the Heygate and Aylesbury estates. Southwark Council borrowed lots of money to build them. Huge amounts.

Sadly those estates haven’t stood the test of time. Engineers have advised they’re already beyond their useful life. The Heygate estate has been demolished. Southwark Labour plan a number of phases to demolish and replace the Aylesbury estate.

Those massive loans were taken under circumstances where central government paid the debt interest. Unsurprisingly Southwark Council didn’t pay back any of those loans. It kept rolling them over. Effectively an interest only mortgage where someone else paid the interest. we now have debt for estates demolished or planned to be demolished.

Several years ago council housing finance was changed. Interest is no longer paid for by central government.

It makes sense for Southwark to change how it treats housing loans. We should ensure that each year we pay some of the principal back of the loan. For non housing loans we legally have to have a Minimum Repayment Plan (MRP). This hasn’t completely stopped some housing loan principle being paid back but it’s been voluntary and ad hoc. So debt over the last three years has been brought down by £55M to around £400M. But we should decrease it further now that interest payments are paid from actual rents collected.

Eliminating £400M of housing debt would bring council rents down by a number of pound per week.