While Croydon proposes closing public libraries, is withdrawing vital support from community centres and is making local sports clubs homeless, the bankrupt council is sitting on £22.5million of unused development levies.
Community Infrastructure Levy, or CILs, and Section 106 contributions are the monies paid by developers in return for being allowed planning permission for their proposed schemes.
Money raised in this way should, in theory, be “an important tool for local authorities to use to help them deliver the infrastructure needed to support development in their area”, according to the government’s own definition.
But according to an investigation by Property Week, Croydon’s pile of unspent levy cash is just part of at least £1.29billion in developer contributions that have not been used by local authorities across London.
Councils now have to publish an annual infrastructure funding statements, or IFS. Croydon’s most recent IFS, for 2019-2020 and published last month, can be seen here.
According to the Property Week investigation, of the unspent levies in London, around £914million is from Section 106 contributions and nearly £374million from CIL payments.
A spokesperson for the Local Government Association told Property Week: “Councils want to see money from Section 106 agreements and CIL spent on delivering the infrastructure and services that communities need. But this can be a complex process and can take time, with the objective of making the right long-term investment decisions.”
With Croydon Council broke and a spending freeze in place, the demand to use the development levy cash is becoming increasingly urgent for a range of interests around the borough.
According to Property Week’s research, Croydon – for once – is far from the worst London council when it comes to finding uses for their developer levies.
The City of Westminster has 10 times more than Croydon – £250million – in unspent developer contributions accrued over the years. Wandsworth has stockpiled £170million. Brent has £120million in amassed unspent contributions.
Property Week reports, “The largest discrepancy between collection and spending in the 2019-2020 financial year was in Tower Hamlets, which had £38.5million left over after collecting £65.8million but spending just £27.3million. The borough had £101million in overall unspent cash at the end of the 2019-2020 financial year as a result.”
There are various explanations offered for the failure to spend the cash. One theory put forward by Property Week is that Conservative-controlled councils – which include Westminster and Wandsworth – are reluctant to spend money on affordable housing for fear that “poor people will vote Labour”.
The magazine quotes Wandsworth as explaining that it has the funds earmarked for specific, big-ticket projects, such as £27million to untangle the Wandsworth town centre one-way system, for example. But estimates of the cost of that scheme now suggest it could be as much as £68million.
The magazine also quotes developers as saying that they feel “cheated” by councils who take the money and then fail to spend it on the infrastructure around their developments. “This shows that CIL is not achieving what it was intended to achieve,” one developer said.
“They have not spent it, and they should spend it – it is there to be spent. The intention is that it goes on infrastructure delivery.”
In Croydon, the pile of unspent contributions might have been much greater, but more than £20million expected from Westfield never materialised, in the same manner that their promised shopping mall has not materialised.
But with budgets in all departments under increasing pressure since the council issued its Section 114 notice last November, declaring itself effectively bankrupt, calls to make good use of the developers’ millions are only likely to get louder.
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