Research by the Home Builders Federation (HBF) estimates that local authorities in England and Wales are now sitting on more than £9bn of developer contributions, intended to fund local infrastructure such as schools, public transport and affordable housing.

The money paid as part of planning agreements for new housing developments includes £6.6bn from Section 106 agreements and more than £2.2bn raised through the Community Infrastructure Levy (CIL).

The findings from a Freedom of Information (FOI) survey, which received responses from 243 local authorities in England and Wales, show that, of the £9bn estimated to be unspent, around £3bn has been held for more than five years, despite many agreements requiring funds to be used within that timeframe.

Placing the value of this £9bn of accumulated funding into context, government’s annual expenditure on affordable housing grants is expected to be around £2.5bn to £3bn during the remainder of this parliament.

The average council holds £19m in unspent Section 106 infrastructure contributions and £13.9m in unspent CIL funds. However, the issue is particularly acute in a small number of authorities where the results influence this average. The London Borough of Tower Hamlets alone holds more than £260m in unspent developer contributions.

The research also finds that £320m in developer contributions for new healthcare facilities is sitting unspent. This includes around £128m held unspent by 17 NHS integrated care boards (ICBs), 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. This highlights a lack of coordination over how developer contributions will be deployed to support local healthcare infrastructure, the HBF said.

HBF chief executive Neil Jefferson 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. 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 1.5 million homes this parliament.”

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