Section 106 and CIL: Developers pay, but where is the money going? (2026)

Introduction

For the past decade, the housebuilding sector has faced spiralling viability challenges, predominantly originating

from new regulation and policy. The Labour government’s promise to ‘build, baby, build’ and ‘take an axe to red tape’ was therefore greatly welcomed by industry and viewed as the necessary overhaul of planning to bring the much needed certainty and streamlined decision making which would solve the housing crisis and facilitate the Government’s target of building 1.5 million new homes.

While some reforms have been delivered and others are being consulted on, planning contributions in the form of Section 106 contributions and Community Infrastructure Levy (CIL) remain largely unreformed. These charges not only act as an additional de-facto tax on building – reducing the financial viability of development projects and resulting in fewer homes being built – but the funds being levied are often left to pool in the pockets of Local Planning Authorities (LPA).

Funds that are collected by LPAs are justified to fund essential services such as social housing, healthcare, transport, Special Educational Needs and disability support services. Yet according to the HBF, more than £9 billion is unspent in England and Wales, a 9% increase from mid-2024. Pre-2020, LPA’s were not required to publish collected planning contributions and where funds were allocated but after lobbying from the HBA, government required all to do so via annual Infrastructure Funding Statements (IFS).

This transparency shift was welcomed; however, non-standardised language, gaps in information, difficult to find reports and non-publishing have diminished voters ability to hold LPAs accountable for their tax and invest strategy and as infrastructure delivery timelines are not statutory, LPAs do not offer them.

This must change.

Recommendations

This report uses data from the Infrastructure Funding Statements of a geographically representative sample group of Local Planning Authorities to highlight these shortcomings, and make the recommendations that:

• Infrastructure Funding Statements (IFS) are publicly searchable on a national database.
• Local Planning Authorities are required to present their IFS using a standardised format and language.
• LPAs publish ‘storyboards’ which identify funding sources and provide project delivery timelines.
• Unspent contributions (defined as non allocated funds or projects that have not been delivered within projected timeframes) are automatically returned to developers after a period of five years.
• After 5 years, unspent LPA planning contributions can be transferred to their Combined Authorities (CA) for a further two years before automatically returned to developers (if still unspent).

The implementation of these recommendations would support developers to deliver the Government’s aspirations of building homes, while incentivising LPAs to effectively invest in their communities

Background

The primary purpose of Section 106 (s106) payments is to address the impact of housing developments on the local community. The funds provided by developers are allocated to services such as education, affordable housing provision (developers may be required to provide a percentage of their homes as affordable) as well as healthcare and transport infrastructure.

Alongside s106 contributions, 175 (out of 317) LPAs in England also charge a Community Infrastructure Levy (CIL), a fixed-rate charge set by the local authority on qualifying developments regardless of their individual impact on the local area.

Unlike CIL, s106 contributions are negotiated between developers and LPA’s and form a legal agreement but in the Government’s words, the negotiation of Section 106 ‘has become synonymous with inefficiency and delay’.

In recognition of this, the Government has pledged to provide a more transparent and simpler process for s106 negotiations. with more effective engagement between LPAs and developers. However, standardised s106 agreements already exist but are rarely used because of the levy opportunity offered through contract variation and desire to make commitments legally binding.

The move to a fixed charge such as CIL has been discussed many time, however, s106 ensures that increased development costs can be offset, therefore making the process more proportionate for SMEs, while ensuring projects are viable and new homes targets are achievable.

What Councils Actually Report

In reviewing the IFS of seven LPAs across the country, the inconsistent, unstandardised and for some authorities, completely absent information on how developer contributions are used becomes apparent.

An example of this is the most recent IFS published by Westmoreland and Furness’. Not only is it not published annually but includes no clear totals on developer funds, received or spent. Rather, it features multiple complex tables with totals of funds received or spent in this period needing to be manually calculated and therefore obscuring the information available on how this authority is using developer contributions.

Conversely, Norfolk County Council is the only authority within the sample group to include data on the developer funds returned to developers within this period and data on the use of previous years’ funds. Yet, they fail to publish any information on a delivery timeline for projects with allocated funds, nor any details of which projects funds have been allocated to.

Likewise, despite being the only authority in the sample group to have spent more than they received within the period of their IFS (2024-25), Cambridgeshire County Council still retained £70,685,012.75 of unspent developer funds rolled over from previous years. Their IFS offered no information on a timeline for the delivery of projects with funds allocated to them, and no breakdown of funding spent by area or project.

A Typology of Inconsistency

In North Yorkshire Council’s most recent IFS (2024-25), the authority claims that unallocated and unspent funds exist due to projects not yet being identified and agreed. Later, the statement refers to projects that have been identified not having been delivered due to existing funds needing to be ‘spread’ over multiple projects – raising a question as to why unallocated and unspent funds could not be spent on these identified projects.

‘Black Box’ Authorities

Unallocated and unspent funds were present in all of the IFS within the sample group; however, none offered an explanation of how unallocated and unspent funds are going to be used, with some offering vague statements about future projects with no timeline of delivery.

In their most recent IFS, Cornwall Council commit to deliver all projects with funds committed within one year, however the IFS does not track or update the timelines of previously allocated projects.

Nottinghamshire County Council has allocated over £4 million to various projects – the majority of which for education services including a hygiene suite for a local primary school – yet the allocation remains unspent.

Data without Meaning

Westmoreland and Furness Council’s IFS is amongst the most difficult to decipher, with large and complex tables that feature no total figures for funds spent, allocated or retained. Despite being an authority that collects both s106 and CIL funding, all developer contributions were presented as combined figures with limited transparency of how each is being spent.

Likewise, Durham County Council failed to report total figures for funds spent, allocated or retained while also reporting s106 and CIL funds as one ‘developer contribution’ figure. The authority does provide information on the specific projects that funds have been allocated to but not spent or delivered. However, the local community should know when an already funded disability access swing, affordable housing and safer roads project will be delivered.

Why does this matter?

The high cost of building homes imposed on developers by s106 and CIL charges often means that projects are delayed or even terminated due to their delivery simply no longer being financially viable.

The Government understands this, remarking that ‘thousands of constructed or consented s106 units are currently uncontracted and unsold’.

Across the eleven LPA’s in the sample group, £431 million of developer contributions are unspent (See Annex 1). As the Government pledges an additional £1.5 billion of funding to revive local communities, LPAs are a good place to begin their efforts, ensuring that developer contributions are transparent, properly reported, timelined and used.

LPAs continue to bemoan a lack of local infrastructure to support new homes, all while allocating but often not spending billions of pounds given by developers for this missing infrastructure.And these funds do not include the billions of pounds spent delivering new and upgraded infrastructure – such as highways works, grid reinforcement, bus services, commercial space – which a planning application often requires to be granted.

Visualising Developer Contributions: Cornwall

Relative to LPAs in the sample group, Cornwall Council publishes more comprehensive data on their developer contributions. This story map is updated every three months using a software from a provider called ‘ArcGIS’ who, as of 2023, synthesised the data on developer contributions for over 200 Local Authorities across the UK.

The ability to map and produce the data as a story-map is a feature within the standard ArcGIS license. Staff would simply need to be trained to input data into a provided template. While reporting the data on how developer contributions are used will not address the viability challenges posed by s106 and CIL charges in totality, it is the first step to contribution transparency and ensuring local people benefit from their LPA’s levy strategy.

To ensure delivery and fairness, a stick in the form of an automatic levy return (if funds are unspent) should partner the carrot of plan led placemaking.

Conclusion: Fund our Developments and our Communities

If the Government wants to meet their goal of delivering 1.5 million homes, reforming the way developer contributions are reported, allocated and spent must form part of that agenda.

This report highlights a system characterised by inconsistent Infrastructure Funding Statements, vague reporting practices and a lack of accountability over when projects funded by developer contributions will actually be delivered.

Across the sample group examined, hundreds of millions of pounds remain unspent or unallocated while housing delivery continues to face growing viability pressures.

Recommendations

To address these shortcomings, the Government should strengthen the reporting process through:

• A publicly searchable national database of Infrastructure Funding Statements
• LPAs are required to present their IFS using a standardised format and language.
• LPAs publish ‘storyboards’ identifying funding sources and provide project delivery timelines.
• Unspent contributions* automatically returned after a period of five years.
• After 5 years, unspent LPA planning contributions can be transferred to their Combined Authorities for a further two years before automatically returned to developers (if still unspent).

Ultimately, stronger safeguards are required to prevent unspent contributions.

Developers are not cash cows, every pound taken in levies should be done so because it is needed. It should not be left sitting unspent, as not only reduces the vital reinvestment cashflow that housebuilders need but it removes the planned support for children with special educational needs, postpones healthcare provision, leaves infrastructure projects in limbo and drastically reduces the new supply of social housing.

If the Government truly intends to ‘build, baby, build’, developer contributions must work to support housing delivery and thriving communities, not accumulate indefinitely in LPA accounts, all while a lack of infrastructure is used to justify not building homes.