NAO Highlights Weaknesses in Developer Contributions System

A recent report from the National Audit Office (NAO) highlights significant weaknesses in the Ministry of Housing, Communities & Local Government’s (MHCLG) developer contributions system in England — a key mechanism for funding local infrastructure such as schools, roads, public transport, and affordable housing.

The NAO found that staffing gaps in Local Planning Authorities (LPAs), complex Section 106 negotiations, and inconsistent use of the Community Infrastructure Levy (CIL) are limiting councils’ ability to secure and manage contributions effectively.

Key findings include:

• In 2023/24, 44% of affordable homes were delivered via Section 106, but over 17,000 homes remain unsold to housing providers.
• Developers' financial viability assessments often go unchallenged due to limited local authority expertise.
• Many LPAs lack up-to-date local plans, increasing infrastructure pressures.
• Over £8 billion in contributions remained unspent in 2024, with risks of funds being reclaimed if not used.

The government has launched initiatives to improve skills and speed up housing delivery and plans to update viability guidance in 2025.

The NAO recommends improving transparency, reviewing viability assessments, and encouraging greater use of the CIL.

Read the full report here.