Councils Have £8 Billion in Unspent Developer Contributions for Roads, Schools: Report

New houses being constructed on the Chilmington development in Ashford, Kent, England, on Jan. 13, 2020. Gareth Fuller/PA Wire

Local authorities in England and Wales are sitting on £8.1 billion in infrastructure contributions from developers, according to figures obtained by the Home Builders Federation (HBF).

The HBF compiled the figures from Freedom of Information (FoI) request data obtained from 208 local authorities, which showed that councils are holding onto an estimated £6.3 billion in Section 106 agreements and £1.8 billion raised through the Community Infrastructure Levy (CIL).

According to the HBF’s report published on Monday, councils have on average £19 million in unspent Section 106 infrastructure contributions, with more than one-quarter (26 percent) being held for more than five years.

These unspent funds include £817 million in affordable housing contributions, which could pay for around 11,000 homes.

Another £1.1 billion in highways and road contributions could fund the repair of 12.6 million potholes.

Some £873 million in unspent social infrastructure contributions could have paid for around 1,000 sports halls and 4,700 community games areas. And £2 billion could support 126,000 new school places.

As part of the process for granting planning permission, developers will contribute funds to local authorities for projects such as affordable housing, infrastructure, and amenities meant to improve the local area. These contributions are made through Section 106 agreements and CILs, though the principle source of funding comes from Section 106s.

The HBF, which represents the home building industry, estimates the total amount of Section 106 contributions has more than doubled since last year, which the organisation said suggested there is a growing backlog of infrastructure projects which have not been delivered by local authorities.

The report says that these payments not funnelling down into the community is leaving residents unsure of the benefits that new developments are bringing to their area.

Funds Held for 20 Years

The HBF said the top 20 councils which had the most unspent Section 106 contributions in the year to July hold a combined £2 billion, with Oxfordshire County Council holding the largest amount, at a total of £287.5 million.

Oxfordshire County Council was also found to have held funds for decades, with the report citing community notes from April highlighting an “issue with the age profile of monies held ... with some monies having being held for over 20 years without any movement other than accruing of interest.”

The organisation’s research also shows that local authorities in major cities with communities worst affected by the housing crisis “are holding the greatest sums of monies that have been allocated for Affordable Housing,” with six of the ten councils with the highest amounts of unspent Affordable Housing contributions being in London.

Wokingham has the second highest amount of unspent Affordable Housing contributions (£41 million), after the City of London Corporation (£86.8 million).

The report said that house prices in Wokingham “are more than 10 times local wage levels” and that in financial year 2022-2023, the council spent £680,000 on emergency accommodation for homeless households and a further £200,000 on temporary accommodation.

£7 Billion Annually

Neil Jefferson, CEO at HBF, said that developers contribute around £7 billion annually to local authorities for plans to boost local infrastructure, “but some councils are increasingly failing to invest this cash into the services that so desperately need it.”

Jefferson 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.”

He added that it was “nonsensical” to have billions sat in council bank accounts while central government is “desperate to find money to invest in infrastructure to drive growth.”

“Whilst 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,” he added.

Councils Working in ‘Difficult Circumstances’

Responding to the report, the Local Government Association (LGA), which represents councils in England and Wales, told The Epoch Times by email that councils are “working hard in difficult circumstances to build the homes and infrastructure our communities desperately need.”

The LGA’s housing spokesman, Cllr Adam Hug, said that local authorities can require development contributions to help fund local infrastructure, services, and facilities and that collected money “is then held until it can be spent on the projects which it has been earmarked for.”

Hug continued, “This can be a complex process which often requires pooling funds from multiple developments and other funding sources, such as government grants, while also relying on multiple and varying timelines for completion of development phases.”

He added that delays can also arise “from the need for careful financial planning to ensure contributions are used efficiently, with major projects such as schools or highways requiring significant coordination. Furthermore, affordable housing contributions can take time to utilise due to processes including securing sites or obtaining planning permissions.”

“While funds may be classed as unspent, it is important to look at what has been allocated by the council instead to understand how the council plans to spend the money,” he added.