NuGen Properties

Councils sitting on £2.8bn unspent S.106 contribution

According to the Home Builders Federation (HBF), council are failing to spend millions of pounds that private housing develops stump up in planning deals.

The HBF estimates that £2.8 billion is sitting in local authority bank accounts that is supposed to be being spent to fund local services and infrastructure upgrades.

Home builders make Section 106 contributions to local authorities as a quid pro quo for planning permission. It is meant to go back into the local community but it appears much of it is going unspent.

Unspent S106 funds include: £567m allocated for affordable housing – enough to fund the construction of nearly 7,000 homes;       £420m allocated for schools – enough to cover the training costs of 45,000 teachers; £384m of unspent highways contributions – enough to fill six million potholes; and      £334m in unspent social infrastructure contributions – enough for 1,900 community games areas.

The report is based on freedom of information (FOI) responses from 171 local authorities, constituting 50% of all local authorities in England and Wales. It shows that an average of £8m is held by each council.

HBF has extrapolated these findings across all local councils to reach a £2.8bn total, which is about a third (35%) of the £8bn that housing developers hand over to planning authorities every year.

Why this matters to the HBF is that S.106 payments are a way of winning hearts and minds of local residents who probably don’t want any more new houses built in their vicinity. At least with the sop of a new playground, some might be less vocal in their opposition.

Not spending the money means a missed chance to mute the nimbies, the developers reckon, and makes getting planning permission harder than it might otherwise be.

Worst offenders are South Gloucestershire Council and Leeds City Council, which are each sitting on £58m of unspent S.106 funds. London councils Greenwich (£57m), Lambeth (£50m) and Kensington & Chelsea (£44m) also appear to be struggling to spend the money.

HBF executive chairman Stewart Baseley, at, said: “Each year developers contribute around £8bn to local authorities for the provision of local infrastructure, affordable housing and education, recreational and health facilities. 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 as councils fail to turn payments into the services, facilities and infrastructure that residents want. Not only is this a disservice to communities but it undermines perceptions of home building, allowing lazy negative perceptions to persist.

“In the face of a deepening housing shortage and cost of living crisis, it has never been more important to build new homes and local people should enjoy the benefits that can bring.”

Meanwhile, local government is going through a financial crisis. Britain’s biggest local authority, Birmingham, declared itself bankrupt last week, following on from Northamptonshire, Croydon, Slough, Thurrock and Woking in recent years. According to reports, up to 26 more councils could go under in the next two years.

Section 106 Agreements and unspent developer contributions in England & Wales is available via the HBF website

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