The National Federation of Builders (NFB) has called on the Government to reform the way developers contribute to local communities after the City of London revealed that millions of pounds remain unspent.
With so little transparency around developer contributions, the NFB lobbied the Government to introduce legislation requiring councils to publish details of where contributions were being spent. This legislation came into force in September 2019.
However, figures reveal that in the City of London, between April 2016 and March 2019, developers paid £619,760 in monitoring fees. Yet in the same period, the city spent just £142,350 on monitoring and, when added to balances from previous years, has built a surplus of £1.2 million.
For section 106 planning obligations, which among other matters includes affordable housing, the city received £237.2 million from industry but spent only £148.9 million. Some £6.8 million was earned in interest and a surplus of £95.1 million has been accrued.
On community infrastructure, which is charged through a levy titled CIL, the city received £30.1 million, spent £1.4 million and has a remaining balance of £28.7 million
With many hundreds of local authorities also collecting development taxes, the organisation says that that new reporting rules must encourage councils to be transparent on how the levy will be spent, reduce them when there is a surplus, or ensure they are returned to industry.
‘Developers contribute millions of pounds to their communities, yet too much of it is held, rather than being reinvested. The City of London has profited on monitoring fees to the tune of 435% and has an unspent balance of £125 million,’ said Richard Beresford, chief executive of the NFB.
‘Our members are operating on tight profit margins and often in demanding conditions but still they are meeting their obligations. For the authorities to then not invest that money in their communities is simply not good enough,’ he added.
Rico Wojtulewicz, head of housing and planning policy for the House Builders Association (HBA), pointed out that as well as unspent fees and developer contributions, the industry wastes months and even years negotiating agreements and this ultimately increases construction costs.
‘It’s time the Government reformed the contribution process and replaced negotiated taxes with set levies,’ Wojtulewicz said.