UK Still Repaying Council Housing Debts After 65 Years
Councils’ hands are tied from paying off a mountain of council housing debt.
But a new plan launched today says that freedom from Whitehall would mean they could pay it off in only 25 years. According to a new report published today by Southwark Council and the Local Government Information Unit, lower interest rates mean this could be done at the same time as improving run down estates – without increasing spending.
Once and for all – funding the improvement gap in existing council housing, uses the experience of Southwark Council – one of the largest local authority landlords in the country with responsibility for 55,000 properties – to show that the government’s piecemeal policy on housing has resulted in a financial black hole, and to propose a radical new plan.
The report shows that councils nationwide owe £18 billion from old loans to build council housing. Every year as a country we are raising £6 billion a year from council house rents – and spending more than £1 billion repaying debt. Amazingly, debt is often being paid on estates that have already been demolished.
Councils are keen to pay this debt off, but the government’s complex subsidy system means it doesn’t make financial sense. As a result, councils have been taking out new loans to pay off the capital of the old loan every time a loan matures.
“Following the Second World War, the heavy toll of bombing combined with an ongoing need to clear slums led to widespread borrowing to fund reconstruction in the form of tens of thousands of council owned homes. Almost 65 years after the end of the war, that debt is still being repaid.” p.3
The report shows that the financial system for council housing has been broken for many years – what is needed now is a new solution that will provide good quality housing for the next generation.
Once and for all – the Three Point Plan:
1. Restructure debt repayments to take advantage of historic low rates and allow councils a ten year payment holiday.
2. Use the cash freed each year to fund a massive renewal plan that would leave houses in top condition – and therefore cheaper to maintain.
3. Use the cash freed up from repair budgets to pay down debt over 25 years.
Report author Amelia Walker says:
“We were shocked to find that every man, woman and child in Southwark – as in many parts of the country – owes over £3,000 of council housing debt. It might have made sense to run council housing on the never-never when the economy is strong. But now we are recession we need to let councils pay down this debt. Government needs to agree to let councils do what needs to be done, not just for tenants but for everyone who is living with this debt burden.”
Southwark Executive Member for Housing Kim Humphreys says:
“Getting more and better work done with less money is crucial for this council. The council has an investment programme of some £100m a year, £70m of which is directly spent on its housing and over £20m on regeneration, which includes the replacement of poor housing.
“We would love to devote this money to renewing all our housing, once and for all. But we are under constant pressure from the government to meet its artificial standards and we are hamstrung by government rules on debt and housing finance. Give us the freedom to do what needs to be done – and we will all benefit.”
Topics: 2010, build, cash, Council, debt, demolished, financial, financing, Governance, government, housing, interest, loan, loans, low rates, matures, moniter, monitor, new, old loans, Parliament, payment, payoff, poor, rates, renewal, rent, responsibility, restructure, run down estates, slum, Southwark Council, subsidy
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