Communities In Dark Over Millions Of Unspent Developer Contributions

Despite the Government passing legislation requiring councils to publish information with regards to how contributions made by developers are spent, huge amounts of money within the City of London remain unaccounted for. 

According to research, conducted by the National Federation of Builders (NFB), over £125 million taken from developers has languished unspent in London. 

Between April 2016 and March 2019, developers paid over £237 million in Section 106 planning obligations. However, only £148.9 million was allocated to community investment. During the same period, over £6 million was made in interest and a surplus fund of £95.1 million was accrued. 

Developers and the construction sector representatives also paid more than £30 million into the Community Infrastructure Levy (CIL) whilst only £1.4 million was spent, leaving a huge surplus of outstanding money which should be pumped directly into local community projects. 

The NFB are now calling on local authorities to be more transparent with how money from the construction sector is being spent with clear projections on how unspent contributions will be used to better the local communities it was intended to help.  

Previously, councils were not required to report on the total amount of funding received, or how it was spent, leaving local residents in the dark. But the new rules are supposed to allow local communities across the country to see how every pound of property developers’ cash is spent on new infrastructure.  

With developers paying £6bn towards local infrastructure in 2016-17 alone, it is clear that a lot of investment should be taking place. 

The Government believed that this new rule will ensure a transparent and accountable system, which will help local communities and developers see how contributions are being spent and understand what future funds will be spent on. 

However, recent research suggests that local authorities still need to explain how excess money is being used to plan and fund future community schemes. 

Richard Beresford, Chief Executive of the NFB, said:

“Developers contribute millions of pounds to their communities, yet too much of it is held, rather than being reinvested. The City of London has profited on monitoring fees to the tune of 435% and has an unspent balance of £125m. Our members are operating on tight profit margins and often in demanding conditions but still they are meeting their obligations. For the authorities to then not invest that money in their communities is simply not good enough.” 

Rico Wojtulewicz, Head of Housing and Planning Policy for the House Builders Association (HBA), said:

“As well as unspent fees and developer contributions, the industry wastes months and even years negotiating agreements, and this ultimately increases construction costs. It’s time the Government reformed the contribution process and replaced negotiated taxes with set levies.” 

Today's Conveyancer