Research suggests £9 billion in developer contributions remain unspent by councils

According to research by the Home Builders Federation, the sum includes £6.6bn from Section 106 agreements and over £2.2bn raised through the Community Infrastructure Levy (CIL).

The HBF said almost a third of the total had been held for more than five years.

The report is based on freedom of information requests to local authorities in England and Wales, with 243 providing a response.

The HBF said the average council holds £19 million in unspent Section 106 infrastructure contributions and £13.9 million in unspent CIL funds.

“However, the issue is particularly acute in a small number of authorities where the results influence this average,” it said.

The London Borough of Tower Hamlets is said to hold more than £260 million alone in unspent developer contributions.

The HBF also revealed that:

• There had been an £800m (9%) increase in unspent developer contributions since it last reported on this issue in mid-2024
• £700m for affordable housing and £2bn for schools is waiting to be spent.
• Local authority compliance with reporting of their unspent developer contributions has fallen from 90% to 75%.

HBF said: “While many local authorities cite pre-allocated funding structures and limitations in staffing as reasons for delays, the length of time that substantial sums remain unspent raises increasing concerns about inefficiencies in spending and delivery – with a third of Section 106 funds held unspent for more than half a decade, up from a quarter of funds in 2024.”

The report also claimed that £320 million in developer contributions for new healthcare facilities was sitting unspent. “This includes around £128 million held unspent by 17 NHS Integrated Care Boards, who received the funds from councils. In other cases, requests by ICBs for access to the earmarked healthcare fund have been refused or ignored by councils.”

HBF claimed this highlighted a lack of coordination over how developer contributions will be deployed to support local healthcare infrastructure.

HBF said it would be urging the Government to support local authorities to get on a sustainable financial footing “so that they can direct resources to make better and faster use of developer contribution funds, strengthen transparency and accountability in reporting unspent contributions, and invest in local authority capacity and delivery capability”.

Existing unspent S106 and CIL payments must also be taken into account when council objections to new planning applications cite concerns over infrastructure pressures, it added.

Neil Jefferson, Chief Executive of the Home Builders Federation, said: “The balance of unspent developer contributions rising to £9 billion 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.”

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 damning 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.

“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.”