Council is sitting on £22.5m in unspent infrastructure levies

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.

£22.5m in contributions from developers towards public infrastructure have not been used in Croydon

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.

Some councils, such as Wandsworth, say they have earmarked CIL funds

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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7 Responses to Council is sitting on £22.5m in unspent infrastructure levies

  1. I believe that S106 monies have a “use it or lose it” clause together with defined categories in which it has to be spent. Hopefully Croydon is not having to return unspent monies.

  2. Shows how crap Croydon Council, Croydon Labour and Croydon Tories are when it takes journalists to find out for them that the cupboard isn’t bare, its’ stuffed with over £22 million quid.

  3. Michael Hembest says:

    The problem, I am told, is the money has to be used “in the vicinity” of the development. I think the vicinity has not been defined.

  4. Warren Pierson says:

    I wonder whether brick by brick have paid their CIL contributions?

  5. Ian Kierans says:

    Is there anyone left to do the defining? There is no answer from anyone at Building Control or Planning or in fact most departments and Councillors- not even sure there are lights on anymore. Do we have a Council even? The reality suggests Croydon Council and Councillors are a myth – we hear ghostly noises sometimes but that is about it – even the fines are automatic!
    It appears we have gone totally digital and the Computer has no external input slot

  6. Susan Davidson says:

    Councils’ leveraging cash as part of consents is nothing new but the proposals have to meet planning rules.

    Of greater concern is planning officers forgetting SPD2 has been revoked and still blindly recommending proposals for consent effectively strengthening the Appellants’ case at appeal – that bad officer practice costs the council dearly.

    Added to this is Cllr Sean Fitzsimons offering words of support to applicants for use at appeal against the council and potentially costing the council dearly.

    This is the committee member who loves to scrutinise balcony decorative metalwork in applications but when it came to his former role (sacked from) on the council’s scrutiny committee he totally failed to see a huge iceberg with the words bankruptcy on it. Should he even be allowed to sit on council committees after that magnitude of outright failure?

    • Totally agree Susan, about having to meet ‘planning rules’, which in so many cases of course they don’t!

      But any ‘leveraging’ of cash must also comply with the law, which is the matter to be determined next week.

      As well as the not insignificant matter of Regulation 122, the government’s website includes the following:

      “…Policies for planning obligations should be set out in plans and examined in public. Policy requirements should be clear so that they can be accurately accounted for in the price paid for land. … It is not appropriate for plan-makers to set out new formulaic approaches to planning obligations in supplementary planning documents or supporting evidence base documents, as these would not be subject to examination. …”

      I can find nothing within the Local Plan about planning obligations relating to sustainable transport. (If anyone knows different please get in touch).

      I can find no sign of the only relevant, council guidance available (and listed on committee reports under Supplementary Planning Documents/Guidance) ever being ‘examined in public’ or formally adopted by the council as SPD or SPG. (By the looks of it, I’m not sure that it was ever properly finished!).

      And in any case, that document makes no mention of s106 contributions towards ‘sustainable transport’.

      So what authority does ANY officer have, to keep recommending £1500/unit as the figure NEEDED to make a development in Sanderstead 9or elsewhere) acceptable in ‘planning’ terms? (Again, if anyone knows, please do get in touch).

      Totally agree (also) about officers ‘forgetting’ SPD2 has been revoked, Fitzsimons and ‘balcony decorative metalwork’ (the farcical ‘debate’ on 88 Riddlesdown Road) and ‘support to applicants (by officers and councillors) for use at appeal’. More to come on all those points soon (hopefully).

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