S106 contributions – a need for more transparency

With affordable housing held as a key priority for the British public, recent revelations that local councils are sitting on hundreds of millions of pounds designated for affordable housing appear even more staggering.

Figures obtained by the Huffington Post indicate that over £375m is available with £100m not even allocated to specific projects. A figure which could be even higher considering 66 local authorities did not respond to the Post’s FOI request.

This vast sum was collected from builders and developers under Section 106 agreements. Anybody who has worked in the planning industry will have come across these agreements - which are also referred to as developer contributions, along with highway contributions and the Community Infrastructure Levy. Section 106 agreements are an important tool in the planning process, allowing developers to provide local authorities an amount of money for the purpose of building affordable homes when they are unable to provide them on-site.

In reaction, Polly Neat (Chief Executive of Shelter) commented that: “Councils should explain to the public why money for affordable housing isn’t being invested for that purpose given the housing emergency we face”, calling for more transparency in local government over the issue of S106 spending.

The issue how councils invest their S106 funding appears to be widespread across England. Embarrassingly for the housing minister Dominic Raab, his own local council (Elmbridge Borough Council) has £8m of funds still to be allocated.

Understandably, local authorities insist the money is often subject to restrictions and can be for projects that take time or the money is being pooled for larger schemes. In many cases this will be true, however the upward trend of rough sleeping in England is clearly not going unnoticed given that affordable housing now ranks among some of the biggest issues we face as a country. If local authorities are to appear as dedicated to combating the housing crisis as central government, they need to increase their transparency over the spending of developer contributions on affordable housing.

This article was written by Oliver Pearce, Senior Account Executive at MPC.