Councils holding billions in unspent section 106 contributions, Home Builders Federation report claims

Councils in England and Wales are sitting on more than £8bn of infrastructure contributions, including over £6bn from section 106 agreements and almost £2bn raised through the Community Infrastructure Levy (CIL), research by the Home Builders Federation (HBF) has claimed.

The HBF, which based its findings on responses to Freedom of Information requests from 208 local authorities, said that, on average, councils hold £19m in unspent section 106 contributions.

The research found that 26% of the unspent contributions have been held for more than five years, suggesting that around £1.6bn has been sitting in council bank accounts for more than half a decade.

The top 20 councils collectively hold around £2bn, with Oxfordshire County Council holding the largest amount of unspent section 106 monies among respondents (£288m).

Recent committee notes published by Oxfordshire County Council highlight that it has held some funds for more than 20 years.

According to the report, the estimated £8bn of unspent money includes:

• £817m in unspent affordable housing contributions that "could support the delivery of around 11,000 affordable homes"
• £1.1bn in highways and roads contributions across England and Wales: "enough to fund the repair of around 12.6 million potholes"
• £2bn in unspent education contributions "could support 126,000 new school places - at a time when much of the existing school estate is unsafe and in disrepair"
• £873m in unspent social infrastructure contributions "could fund around 1,000 sports halls and 4,700 community games areas".

HBF noted that local authorities in major cities hold the greatest sums of section 106 monies allocated for affordable housing, with six of the top 10 councils with the largest affordable housing sums unspent being in London.

The results also suggested that 80 local authorities – around a third of all those who responded to this question – had returned section 106 money to developers in the past five years, with a total of £20.6m being returned in total.

Section 106 agreements often stipulate that they can be returned to the payee if the sums have been held too long.

HBF called for greater transparency so that council Infrastructure Funding Statements (IFS) clearly outline the reasons why infrastructure is delayed and how long money has been held.

Local authority planning department budgets must also be placed on a sustainable footing to ensure there are sufficient staff and resources for oversight and monitoring of developer contributions, it said.

Neil Jefferson, CEO at HBF, said: "Each year developers contribute around £7 billion to local authorities for the provision of local infrastructure, affordable housing and education, recreational and health facilities, but some councils are increasingly failing to invest this cash into the services that so desperately need it.

"With the Government desperate to find money to invest in infrastructure to drive growth, it is nonsensical to have billions sat in council bank accounts."

He added: "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."

Adam Carey