The Home Builders Federation (HBF) estimates that £2.8bn in Section 106 and community infrastructure levy (CIL) payments from housebuilders remain unspent in local authority bank accounts.

The report, published today, suggests that millions of pounds of contributions made by housebuilders to fund local services and infrastructure upgrades is going unspent. The money is paid as part of the planning agreement to enhance the communities within which new homes are built.

It includes:

+ £567m allocated for affordable housing, enough to fund the construction of nearly 7,000 desperately needed ‘social’ homes

+ £420m held in unspent education contributions could cover training costs of 45,000 teachers

+ £384m of unspent highways contributions, enough to repair of over 6 million potholes

+ £334m in unspent social infrastructure contributions would pay 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 an average £8m is held by each council.

Extrapolating these findings across all local councils suggests that almost £2.8bn in contributions from builders, which could be used to fund local infrastructure, including pothole repairs, sports facilities and education provision, remains in bank accounts.

Home builders make ‘Section 106’ contributions to local authorities as part of the process of securing planning permission. The purpose of the funding is to invest in community services, facilities and affordable housing to ensure local people benefit from development within their area.

This research, however, evidences a lack of capacity or unwillingness to spend these developer contributions which is preventing communities from realising the benefits of local investment, according to the HBF, which says this has inevitable consequences for locals’ perceptions of new homes, further fuelling resurgent NIMBYism that threatens development across England and Wales.

As the country faces an acute housing crisis, the HBF says it is especially concerning that payments made to councils to provide affordable homes are not coming to fruition.

HBF is calling for developers’ contributions to be spent according to their negotiated purpose and within their agreed time limit, rather than returned to developers or left unspent.

Stewart Baseley, executive chairman at HBF, said: “Each year developers contribute around £8billion 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.”