£9bn developer cash sits idle in councils across England and Wales

Councils are holding more than £9bn in developer contributions, intended to fund schools, healthcare and affordable housing.

Research from the Home Builders Federation (HBF) shows local councils in England and Wales are sitting on more than £9bn in developer contributions. Around £3bn has been held for over five years despite agreements stating it should have been spent sooner. 

To conduct the research, HMF surveyed 243 councils and found the funds came from Section 106 agreements (£6.6bn) and the Community Infrastructure Levy (£2.2bn). 

On average, councils hold £19m in unspent Section 106 money and £13.9m in Community Infrastructure Levy funds. However, Tower Hamlets in London was discovered to have more than £260m. 

Almost £3bn is earmarked for schools and affordable housing and around £320m for healthcare has also gone unspent. With this in mind, some NHS bodies have asked for the money but been refused or completely ignored. 

Neil Jefferson, chief executive of the HBF, 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. 

‘This money should be funding schools, healthcare, affordable housing and other essential local infrastructure, yet billions sit idle, in some cases for over five years. Investment in new housing brings huge economic and social benefits, but far too many of these advantages are going unseen by local communities.’

‘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,’ Jefferson continued. ‘Urgent action is needed to ensure this money is spent promptly, supporting communities, improving local services, and driving growth.’

The report also found that fewer councils are publishing reports on their spending – just 75% met the deadline last year, down from 90% in 2020.

Jefferson added: ‘New homes should be providing benefits for both new and existing residents, but the ongoing failure of local government to use this money is undermining support for new housing and threatens the government’s ambition to build 1.5m homes this parliament.’

Image: Vanessa Lee/UnSplash 

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