Southwark Council is aiming to reduce its debt by £3.7 million by March 2026, targeting a drop from £14.7 million to £11 million. This £14.7 million debt figure includes arrears that have accumulated due to the Covid pandemic, additional economic challenges, the cost-of-living crisis, geopolitical issues, and increased running costs from higher utility bills and staff costs, which have impacted tenants' ability to pay. It also includes increased billing in 2024 and 2025 for backdated landlord and tenant events, such as lease renewals and rent reviews that were suspended during the pandemic, as well as an increased level of debt under agreed repayment plans. A single case accounts for over £2 million of the total debt.

The council's Education and Local Economy Scrutiny Commission met on 6 October 2025, to discuss the debt reduction plan, as well as the commercial property portfolio and youth services.

The debt reduction is part of a larger Debt Action Plan that uses several key performance indicators (KPIs) to measure success:

  • Achieving a 95% billing collection rate for 2025–2026.
  • Reducing debt by £1.5 million annually until 2029.
  • Reducing debt by £1.2 million annually through lease renewals.
  • Historic debt reduction target: £3.7M (from £14.7M to £11M by March 2026)

The council's commercial property portfolio plays a significant role in this plan. The portfolio consists of 1,104 leased interests, including retail parades, lock-up shops, office units, workshops, and telecom aerials. Annual income from the commercial estate is projected to be £25.5 million for 2025–2026, with a further increase to £27 million projected by 2028–2029. According to the Public Reports Pack, lease management is actively focused on maximising rental income by promptly letting vacant units and negotiating lease renewals and rent reviews.

The council's tenant selection strategy, as outlined in the 2021 Asset Management Plan (AMP), prioritises income maximisation while also considering tenant mix, support for independent trades, protection of neighbourhood character, and regeneration aspirations. Certain uses, such as payday loan shops, betting shops, and outlets selling foods high in salt, sugar, and fat, are excluded.

The Public Reports Pack also noted that significant resources are spent dealing with leaks into commercial properties from upper floor Council flats and Housing communal walkways. These leaks can take days or even weeks to resolve, often leading to compensation claims from tenants and rent-free periods. The report indicates that improvement is required to find better, more reactive solutions.