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£1.5bn of Section 106 contributions left unspent by councils

Out-Law News | 08 Jan 2014 | 1:04 pm | 1 min. read

Local authorities across England are holding onto £1.5 billion of cash contributions made by developers under planning obligations to fund community schemes, according to a BBC report .

Responses to Freedom of Information requests made by the BBC to the country's 353 councils have shown that £421 million of Section 106 contributions have not been allocated to any future projects. £9.8m of unspent contributions have been returned to developers over the last five years because they had not been spent within the agreed time period.

Section 106 agreements are negotiated between the developer and the local authority as part of the planning process and set out planning obligations to make a proposed development acceptable. They are generally used to secure financial contributions towards affordable housing and local infrastructure.

The BBC investigation showed that the largest amount of unspent money is held by Hertfordshire County Council with £56m, whilst the largest amount of unallocated money is held by Swindon Borough Council with £18m. Essex County Council has returned the largest amount to developers, with £1.2m paid back over the last five years.

A spokeswoman for Hertfordshire County Council told the BBC that there are "strict legal limitations" on how Section 106 money can be spent. "Money provided through Section 106 agreements can only be used for the purposes set out in the agreement and not for other purposes. Agreements often include geographical limitations, and limits round how long the money may be kept for," she said.

The Home Builders Federation director of economic affairs John Stewart said that councils "clearly have an obligation to spend these funds to benefit their communities". "However it is also imperative that they transparently account for these contributions to their residents who must see and experience the true benefits that come with the building of new homes in their area."

"Otherwise residents will simply see new housing placing additional burdens on local facilities and services, unaware of the compensating benefits from S106 agreements, whether these are purely financial contributions or benefits in kind," Stewart said.