A report published by the Public Accounts Committee (PAC) said the initiative, which collects developer contributions through Section 106 agreements and the Community Infrastructure Levy (CIL), was hit by “systemic problems”.
The PAC said challenges within the planning system made it hard for local planning authorities (LPAs) to ensure they received the right amount of developer contributions. It found that in February this year, just 86 LPAs – less than a third – had an up-to-date local plan, compared to 149 in 2019.
Without a local plan, planning authorities may not be able to meet the demand for new homes or determine the appropriate amount of developer contributions.
Further, as of November last year, only 52% were operating a CIL.
The report said there were not enough planners to meet the increasing workload, and many were being lost to the private sector.
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The PAC said the imbalance of planners in the public and private sectors meant larger developers had better specialist negotiators, making it hard for councils to challenge a developer’s claims around viability assessments of whether sites were financially feasible and therefore reduce their contributions.
It said LPAs lacked the skills, capacity and resources to challenge viability assessments effectively.
Its review also found that affordable homes funded through Section 106 agreements were left unsold, despite the current housing shortage. According to the PAC, the Ministry of Housing, Communities and Local Government (MHCLG) does not know how many of these homes exist.
The department suggests there are around 800 homes listed on the Section 106 Affordable Homes Clearing Service, which was set up to sell uncontracted and unsold homes to housebuilders, registered providers and local authorities.
However, the PAC received evidence from the Home Builders Federation (HBF) suggesting the number of unsold affordable housing units was much higher, at around 17,000.
When the PAC challenged the government on this disparity, it said it was not clear why this existed. The committee has asked the government to improve its way of identifying the problem.
Any empty affordable home is ‘senseless’
Sir Geoffrey Clifton-Brown MP, chair of the PAC, said: “This country is in the middle of an acute housing shortage, and families around the country have long been unable to access the homes they need as a result. To see any affordable home sitting empty in this context is a senseless, wasteful system failure.
“Even more frustratingly, the government’s tally of how many unsold S106 homes there may be is miles wide of the sector’s own figures.
“By the sector’s accounting, a good proportion of the new affordable homes required in a year, 17,000 of them, may be waiting out there unsold – but the government could not explain the wide disparity between this figure and the 800 homes it has itself listed as available. This state of affairs must not be allowed to continue.”
Clifton-Brown said it was understandable that the government was focusing on planning reform to unlock growth, but its report “demonstrates the scale of some of the problems it has to unpick – in particular, the drought of planners in local authorities”.
He added: “Without a functioning pipeline of highly skilled planning professionals, councils will continue to be outmanoeuvred in any negotiation with developers in affordable homes negotiations.
“Given the government’s ambitions for huge increases in housing numbers, there are valid concerns that infrastructure construction will lag behind. It’s even more important that the developer contribution system works properly to keep up with planned supply.
“If government is serious about making the developer contribution system work properly, it must show how it is going to address this problem, as well as the other systemic issues articulated in our report.”
