Councils sitting on £3bn of developer contributions, report finds

Councils could be sitting on nearly £3bn of unspent contributions from developers, new research from the Home Builders Federation (HBF) has found.

A report published today suggests local authorities in England and Wales have an average of £8m in their bank accounts from payments made by housebuilders to fund local services and infrastructure upgrades.

The funds are said to include £567m allocated for affordable housing, £420m for education, £384m for highways and £334m for social infrastructure.

The HBF said the money would be enough to fund 7,000 affordable homes, 45,000 teachers, repairs to more than six million potholes and 1,900 community games areas.

The report, based on Freedom of Information responses from 171 local authorities, constituting 50% of all local authorities in England and Wales, implies a national total of £2.8bn of unspent contributions from developers.

Housebuilders make around £8bn in Section 106 agreements and other contributions to local authorities each year as part of the process of securing planning permission. 

The purpose of the funding is to invest in community services, facilities and affordable housing to ensure local people benefit from development within their area.

The HBF said the findings suggest a “lack of capacity or willingness” to spend the contributions, preventing communities from seeing the benefits of local investment.

The organisation is calling for councils to spend the funds according to their negotiated purpose and within their agreed time limit, rather than leaving them unspent or returning them to developers.

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HBF executive chairman Stewart Baseley said: ““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 as councils fail to turn payments into the services, facilities and infrastructure that residents want. 

“Not only is this a disservice to communities but it undermines perceptions of home building, allowing lazy negative perceptions to persist.

“In the face of a deepening housing shortage and cost of living crisis, it has never been more important to build new homes and local people should enjoy the benefits that can bring.”

The report found councils in parts of the country with the worst housing shortages had the largest amount of unspent funds, with Kensington and Chelsea council having £20m of unspent money set aside for social housing, while Leeds council had £17m in their account. The biggest underspend was found in South Gloucestershire council with £582m unspent.