House builders' community cash paid up to 10 years late

A council has admitted there were "systematic failings" with the monitoring of payments that were due to be given to it by housing developers that were intended to fund community facilities.

Luton Borough Council has clawed back £4.2m of the money that should have paid between 2010 and 2021.

The agreements are supposed to pay for things like roads, schools and health centres to offset the effects of new housing or other types of property.

The council said reports that almost £140m remained unpaid were "misleading".

When developers want to get permission for a building project, they often agree to make what are known as Section 106 (S106) payments towards infrastructure improvements.

Often the payments are triggered at a particular stage of a development, such as completion of a certain number of houses.

Some councillors in Luton were concerned that these sums were not being paid on time and a review was carried out of the 494 agreements made since 1990.

The council's Scrutiny Finance Review Group was told on Monday that £4,193,345 of S106 payments had not been paid when due between 2010 and 2021.

Some £3,179,082 had already been recovered and another £1.0m was due to be paid by the end of the year.

Amjid Ali, Liberal Democrat leader of the council, said: "It is worrying to find that there have been systematic failings with the S106 collections."

David Franks, an independent councillor, told Monday's meeting that he had battled for nearly a year to get an official report on the work being done to collect the outstanding amounts.

He also said that a report issued last year had referred to as much as £138m of late payments, but Sarah McLaughlin, the council's director of sustainable development, said: "Sums recently reported, quoted and published are significantly overstated.

"The £138m is completely misleading in that we're talking about projects which have not started or triggered one of its contributions, so would not be part of a recoverable project."

Councillor Ali added: "I have made it clear to the chief executive and am satisfied that the scope of the investigation into this will provide a transparent outcome.

"We do need to scope out and get to the real figure of how much is owed to the people of Luton.

"I am hopeful that, over the next month or so, the situation will be a lot more clearer."

On the face of it, the idea of S106 agreements make sense.

Rather than developers making a huge profit from building houses, and leaving local service providers to pick up the tab for the facilities needed by new homeowners, the developers have to chip in.

But the system is often found to be flawed.

Councils have ended up taking companies to court for not paying the sums they have agreed to pay, risking huge legal fees.

Developers have found that their projects are not as profitable as they were expecting, so they seek permission to change their S106 obligations.

Councils often feel compelled to give consent to the change because the alternative might be a half-finished housing estate.

And there is often no watertight system for monitoring payments and enforcing them if necessary.

The government has unveiled a package of measures to try to improve the system, but it will still depend on councils keeping a very close eye on the developers.

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