More than £9bn in developer contributions earmarked for schools, transport, healthcare and affordable housing is sitting unspent in council bank accounts, according to new research.
A freedom of information survey by the Home Builders Federation (HBF) estimates that £6.6bn in Section 106 payments and £2.2bn raised through the community infrastructure levy (CIL) remain unspent.
Of that total, almost £3bn has been held for more than five years, despite many agreements requiring the funds to be deployed within that timeframe.
Anual government spending on affordable housing grants is expected to total between £2.5bn and £3bn for the remainder of this parliament, meaning councils are holding the equivalent of several years’ worth of central funding.
On average, each authority holds £19m in unspent Section 106 infrastructure contributions and £13.9m in unused CIL funds.
Yet, the sums are heavily concentrated. Tower Hamlets alone is sitting on more than £260m, around nine times the national average on a per-household basis.
The HBF says unspent balances have risen by £800m since mid-2024, despite overall developer contributions falling in line with weaker housing supply.
Around £700m allocated for affordable housing and £2bn earmarked for schools remain unused, alongside £320m intended for new healthcare facilities.
In some cases, £128m is being held by NHS integrated care boards after being passed on by councils.
In others, requests from health bodies for access to funds have reportedly been refused or ignored.
Planning delays and capacity crisis
The report comes as Labour aims to deliver 1.5 million homes during this parliament, a target already under pressure from rising construction costs, planning delays and investor caution.
Almost every local authority would miss statutory planning targets without relying on deadline extensions known as “performance agreements”, according to recent analysis, showing just how much strain is on planning departments after years of funding cuts.
Spending on planning has fallen nearly 17 per cent since 2010.
Meanwhile, new data shows applications for new homes have surged in parts of England following planning reforms, but completions remain subdued.
The build-to-rent sector has also warned of squeezed margins and slower delivery, with John Lewis recently scrapping its housing venture amid economic headwinds.
With that in mind, the scale of unspent developer contributions represents what the HBF calls a “significant opportunity cost”.
Neil Jefferson, chief executive of the federation, said: “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.”
“The underutilisation of developer contributions is a damning indictment on the ability of local councils to deliver to their communities.”
Meanwhile, the proportion of councils publishing mandatory infrastructure funding statements by the December 31 deadline has fallen from 90 per cent in 2020 to 75 per cent in 2025.
Councils argue that funds are often pre-allocated to specific projects and that delivery can be slowed by staffing shortages and procurement complexity.
Ministers have recently boosted local government funding and pledged additional resources for planning departments.
But with £9bn, roughly 55 per cent more than the £5.8bn of newly announced local services funding, sitting unused, pressure is mounting on councils to deploy existing resources before citing infrastructure constraints as grounds to resist new development.
For a government betting heavily on housebuilding to drive growth, unlocking that capital could be as key as sourcing new invesment.
