Local authorities in England and Wales are sitting on £9bn of developer contributions intended to fund essential local infrastructure such as schools, public transport and affordable housing.

The unspent money paid as part of planning agreements for new housing developments includes £6.6bn from Section 106 agreements and over £2.2bn raised through the Community Infrastructure Levy (CIL).

The cash pile was revealed following a Freedom of Information (FOI) survey by the Home Builders Federation which received responses from 243 local authorities.

Of the £9bn estimated to be unspent, around £3bn has been held for more than five years.

The average council holds £19m in unspent Section 106 infrastructure contributions and £13.9m in unspent CIL funds.

The London Borough of Tower Hamlets alone holds over £260m in unspent developer contributions.

Unspent Section 106 and CIL funds are rising, despite overall developer contributions falling in line with reduced housing supply.

Local authorities cite pre-allocated funding structures and limitations in staffing as reasons for delays.

Neil Jefferson, Chief Executive of the Home Builders Federation, said: “The balance of unspent developer contributions rising to £9 billion 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.”