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

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).
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.
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.”
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.