Roughly £9bn in unspent developer contributions is being held by councils, the Home Builders Federation (HBF) has found.
According to research from the HBFthe £9bn was acquired via planning agreements to finance local infrastructureincluding schools, affordable housing, and transport.
A £6.6bn share of the planning agreement funds are from Section 106 agreements, with the Community Infrastructure Levy (CIL) having accumulated more than £2.2bn.
Of the estimated £9bn, £700m is for affordable housing and £2bn is for schools. Additional contributions of £320m for new healthcare facilities are also currently unspent.
While agreements necessitate councils to have used the funds already, local authorities have been sitting on roughly £3bn of the funds for over five years, a Freedom of Information (FOI) survey has revealed.
Councils had said delays have occurred due to staffing limitations and pre-allocated funding structures, and the HBF has warned of ‘increasing concerns about inefficiencies in spending and delivery’.
The research also found that some councils possess unequal sums of unspent developer contributions, with Tower Hamlets’ total of more than £260m representing nine-times the national average per-household.
Furthermore, since mid-2024there has been a 9% (£800m) increase in the amount of unspent developer contributions, but councils’ compliance reporting of their contributions has dropped from 90% to 75%.
A growing failure among councils to publish Infrastructure Funding Statements (IFSs) on time mirrors the ‘chronic understaffing, limited capacity, and weak monitoring of how these funds are managed’, the HBF has argued.
The HBF has outlined fears about future infrastructure funding due to the increase in unspent Section 106 and CIL funds, amid the decrease in overall developer contributions that are decreasing alongside lower housing supply.
Given that developer contributions equate to 46% of local government spending on housing and communities, the HBF argues that ‘the scale of unspent funds, therefore, represents a significant opportunity cost for communities’.
Highlighting that the £9bn in unspent funds is roughly 55% more than the £5.8bn announced by the Government as investment in local services, the HBF has called for more support for councils to help them achieve a ‘sustainable financial footing’.
It has emphasised that councils require this assistance to allow for resources to be directed towards using developer funds more efficiently, improving transparency, and boosting and delivery capability.
The HBF has also called for the consideration of existing unspent S106 and CIL payments when local authorities include concerns about infrastructure pressures in objections to new planning applications.
Neil Jefferson, Chief Executive of the Home Builders Federation, said: ‘The balance of unspent developer contributions rising to £9bn in local authority accounts provides further evidence of a capacity crisis in local government and should be a major cause of concern for local communities and for ministers.’
He added: ‘It’s great that Government has, in recent weeks, taken some action in supporting local authority funding, but the underutilisation of developer contributions is a damming indictment on the ability of local councils to deliver to their communities. Urgent action is needed to ensure this money is spent promptly, supporting communities, improving local services, and driving growth.’
Mr Jefferson also reinforced that the failure to use the funds is hindering the Government’s goals of delivering 1.5 million homes over this Parliament.
The MHCLG has been contacted for comment.
