Councils hoard £8bn of builder contributions meant for vital infrastructure, says HBF

Over £8bn of infrastructure payments made by developers remains unspent by local authorities in England and Wales, according to the Home Builders Federation (HBF). 

New research shows that over £6bn from Section 106 agreements and almost £2bn collected via the Community Infrastructure Levy has not been invested in local services such as new social housing, education facilities, GP surgeries, parks and transport upgrades. 

The responses of 208 local authorities to a freedom of information survey by the HBF suggest that councils hold an average of £19m in unspent Section 106 funds.

S106 agreements requiring developers to pay money to local planning authorities for affordable housing and public amenities are the main sources of builder investment.

More than a quarter of the unspent allowances have been held by councils for more than five years, accumulating around £1.6bn in interest.

Oxfordshire County Council holds the largest sum in unspent Section 106 funds among respondents (£288m), with recent committee notes highlighting that some of the money has been kept for more than two decades. 

The estimated £8bn of stockpiled cash includes £817m in affordable housing contributions, £1.1bn in highways and roads funding, £2bn in education contributions and £873m in social infrastructure financing.

The HBF says that local authorities acutely affected by the housing crisis are sitting on the biggest sums of affordable housing funding, particularly in London. 

Wokingham Borough Council has £41m in unspent affordable housing funds, where local house prices are more than 10 times local wage levels. Data released by the council shows that £680,000 was put into emergency accommodation for homeless households and a further £200,000 in temporary housing in 2022-23. 

The results of the FOI requests showed that around a third of respondents have returned Section 106 money to developers in the past five years, totaling £20.6m. 

The HBF is calling for greater transparency so that council infrastructure funding statements clearly outline why services are delayed and how long contributions have been held. 

Neil Jefferson the chief executive at the HBF, said: “Each year developers contribute around £7bn to local authorities for the provision of local infrastructure, affordable housing and education, recreational and health facilities, but some councils are increasingly failing to invest this cash into the services that so desperately need it. 

“Investment in new housing delivery brings unrivalled economic and social benefits to communities, but too many of these advantages are going unseen by local people. With the government desperate to find money to invest in infrastructure to drive growth, it is nonsensical to have billions sat in council bank accounts. 

“Furthermore, a lack of infrastructure provision is often cited as a reason to oppose development, yet this pipeline of billions of pounds of unspent infrastructure funding is too often underappreciated in debates about the impact of new development. 

“While appreciating the pressures and constraints on councils, we simply have to find a better way to ensure this money is spent promptly to benefit local communities, support local services and drive growth.”