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Local authorities in England and Wales are holding more than £9bn in developer contributions intended to fund essential local infrastructure such as schools, public transport, and affordable housing, according to research by the Home Builders Federation (HBF). This includes £6.6bn from Section 106 agreements and over £2.2bn raised through the Community Infrastructure Levy (CIL).
The findings, based on a Freedom of Information (FOI) survey of 243 local authorities, reveal that around £3bn of the unspent funds has been held for more than five years, despite many agreements specifying that the money should be used within that timeframe.
To put this figure in context, government spending on Affordable Housing grants is expected to be around £2.5bn to £3bn annually for the remainder of this Parliament – considerably less than the total developer contributions currently held.
On average, councils hold £19m in unspent Section 106 contributions and £13.9m in unspent CIL funds. However, the issue is particularly concentrated in a small number of authorities. The London Borough of Tower Hamlets, for example, holds over £260m in unspent developer contributions — nine times the national average on a per-household basis.
The HBF’s research shows that unspent developer contributions in England and Wales have increased by £800 million, or 9%, since the last report in mid-2024. Of the estimated £9bn currently held by councils, almost £3bn has been retained for more than five years, despite many planning agreements specifying that infrastructure should be delivered within that period. Within this total, £700m is earmarked for Affordable Housing and £2bn for schools.
Compliance with reporting on unspent contributions has also declined, falling from 90% in 2020 to 75% in 2025. A small number of councils hold disproportionately large sums, with the London Borough of Tower Hamlets alone holding over £260m.
Local authorities are heavily reliant on developer contributions, which form part of the planning permission process and account for around 46% of local government spending on housing and communities, according to the Competition and Markets Authority. Yet, unspent Section 106 and CIL funds continue to rise even as overall contributions fall in line with reduced housing supply, heightening concerns about the availability of future infrastructure funding and representing a significant opportunity cost for communities.
In some areas, particularly London, unspent developer contributions per household constitute a substantial proportion of the average council tax bill. In Hammersmith and Fulham, which holds the highest level of unspent Affordable Housing contributions at £30.5m, average house prices are sixteen times average earnings, making it the fourth least affordable district in the country.
While many local authorities cite pre-allocated funding structures and limited staffing as reasons for delays, the persistence of substantial unspent funds raises concerns about inefficiencies in spending and delivery. A third of Section 106 contributions have now remained unspent for more than five years, up from a quarter in 2024.
The research also highlights £320m in developer contributions intended for new healthcare facilities that remain unspent. This includes around £128m held by 17 NHS Integrated Care Boards, which received the funds from councils. In some cases, requests by ICBs to access the earmarked funds have been refused or ignored, revealing a lack of coordination in deploying developer contributions to support local healthcare infrastructure.
Transparency is declining, with an increasing number of councils failing to publish Infrastructure Funding Statements (IFSs) by the statutory December 31 deadline. IFSs, which detail receipts, spending plans, and unspent funds, are the main way communities can scrutinize how developer contributions are used. Chronic understaffing, limited capacity, and weak monitoring have contributed to the drop in compliance.
The HBF welcomed recent government announcements, such as the Final Local Government Financial Settlement, which will help local authorities boost capacity and support community infrastructure. However, the £9bn in unspent developer contributions remains around 55% higher than the £5.8bn of new investment announced for local services, highlighting the scale of untapped resources.
The federation is urging the government to support councils in achieving a sustainable financial footing, enabling them to direct resources more efficiently, strengthen transparency and accountability, and invest in local authority capacity and delivery. Unspent Section 106 and CIL funds should also be taken into account when councils object to new planning applications on infrastructure grounds.
With the government prioritizing economic growth and aiming to deliver 1.5 million new homes during this Parliament, unlocking the £9bn currently held in council accounts represents an immediate opportunity to fund essential infrastructure improvements, support new development, and benefit communities across England and Wales.
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. 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.”
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