NAO: Developer funding system failing to deliver vital infrastructure

The UK’s developer contributions system is failing to deliver the infrastructure needed to support housing and economic growth, according to a new report by the National Audit Office (NAO). The watchdog’s findings are of particular relevance to the concrete construction sector, which relies heavily on timely delivery of roads, drainage, utilities and foundations to support residential and commercial development.

Developer contributions—secured through Section 106 agreements or the Community Infrastructure Levy (CIL)—help fund critical local infrastructure including highways, public transport, and utilities. But the NAO has warned that skills gaps, outdated local plans, and a lack of transparency are undermining councils’ ability to negotiate and spend this funding effectively.

As of 2024, councils in England and Wales were holding over £8 billion in unspent developer contributions, with over 17,000 affordable homes funded through Section 106 still unsold to housing providers. The CIL, which cannot be used for affordable housing, is in place at just over half of Local Planning Authorities (LPAs), while Section 106 agreements—often complex and resource-intensive—are used to deliver nearly half of all affordable homes.

Crucially for the construction sector, the backlog in negotiations and spending is contributing to delays in infrastructure delivery and site mobilisation. Local authorities, the report found, are frequently outmatched by large developers who employ specialist consultants to negotiate down financial obligations.

“To ensure the developer contributions system delivers value for money, important issues must be addressed,” said Gareth Davies, head of the NAO. “These include reducing the imbalance in skills and experience between local authorities and large developers, and the lack of coordinated central government support.”

Among the NAO’s recommendations are:

• Better support for local planning teams to manage developer funding
• A review of financial viability assessments, which are often used by developers to reduce obligations
• Expanded and more consistent use of the Community Infrastructure Levy

The NAO also noted that only 86 out of more than 300 LPAs currently have an up-to-date local plan—despite government policy requiring reviews every five years. With outdated plans, funding and infrastructure priorities are misaligned, potentially holding back housing and commercial development.

From a concrete industry perspective, the report underscores how systemic weaknesses in developer funding are delaying site preparation, roads, drainage and structural works, which are typically concrete-intensive phases. With £5.5 billion in contributions agreed in 2022–23—down from £6.4 billion in 2019–20—the flow of public-private investment into infrastructure appears to be slowing.

Government has launched a number of initiatives aimed at improving the system, including skills training for planners and efforts to better match developers with affordable housing providers. A consultation on viability guidance updates is expected in 2025.