Source · National Audit Office

Improving local areas through developer funding

This report assesses whether MHCLG is overseeing an effective system of developer contributions that delivers the intended benefits.

Published: 6 Jun 2025 Recommendations: 10 Type: Value for Money NAO confirmed: 10 Department: Ministry of Housing, Communities and Local Government
Dept: Ministry of Housing, Communities and Local Government Topics: Commercial and financial managementHousingInfrastructure financeLocal services and housing nao.org.uk →

Recommendations

10 items
9 accepted 1 partially accepted 5 implemented 5 in progress

Recommendation 1

Addressee: Ministry of Housing Communities and Local Government · Source location: Page 11, 21a

In the short term, we recommend that MHCLG should introduce standardised templates for Section 106 documentation, and consider introducing templates for agreements, to reduce the amount of work for LPAs and improve consistency across areas.

Response position: Accepted

Delivery: In progress · Q4, 2026-27 · Confirmed by NAO

Recommendation 2

Addressee: Ministry of Housing Communities and Local Government · Source location: Page 11, 21b

In the short term, we recommend that MHCLG should amend the requirements relating to the content and presentation of IFSs, in order to make them more consistent and accessible for the purposes of local accountability.

Response position: Partially accepted

Delivery: In progress · Q3 2026-27 · Confirmed by NAO

Recommendation 3

Addressee: Ministry of Housing Communities and Local Government · Source location: Page 11, 21c

In the short term, we recommend that MHCLG should assess whether improving the content of IFSs would be the most effective way to provide stronger data on developer contributions, and would allow better insights and good practice to be drawn out.

Response position: Accepted

Delivery: Implemented · Q2 2026-27 · Confirmed by NAO

Recommendation 4

Addressee: Ministry of Housing Communities and Local Government · Source location: Page 11, 21d

In the short term, we recommend that MHCLG should review the perceived conflicts of interest that arise from consultants representing both LPAs and developers with regard to viability assessments, and determine whether any action is needed.

Response position: Accepted

Delivery: Implemented · Q3 2025-26 · Confirmed by NAO

Recommendation 5

Addressee: Ministry of Housing Communities and Local Government · Source location: Page 12, 21e

In the short term, we recommend that MHCLG should review viability assessments and how they are used, including evaluating whether removing them would make the system work better, or whether there are other ways of improving outcomes (such as open book costing).

Response position: Accepted

Delivery: Implemented · Q2 2026-27 · Confirmed by NAO

Recommendation 6

Addressee: Ministry of Housing Communities and Local Government · Source location: Page 12, 21f

In the short term, we recommend that MHCLG should help LPAs to increase capacity and capability by carrying out a full assessment of the Planning Capacity and Capability Programme to understand what works and disseminate lessons.

Response position: Accepted

Delivery: Implemented · Q4 2025-26 · Confirmed by NAO

Recommendation 7

Addressee: Ministry of Housing Communities and Local Government · Source location: Page 12, 21g

In the short term, we recommend that MHCLG should ensure Homes England reviews the impact of the Section 106 Affordable Housing Clearing Service, looking to make it a permanent service if successful and use the information gathered for wider benefits.

Response position: Accepted

Delivery: In progress · Q2 2026-27 · Confirmed by NAO

Recommendation 8

Addressee: Ministry of Housing Communities and Local Government · Source location: Page 12, 21h

In the short term, we recommend that MHCLG should consider how it can use existing forums or communication channels to provide clarity for LPAs regarding planning matters that fall within its remit, and to signpost them to other sources of advice where appropriate.

Response position: Accepted

Delivery: Implemented · Q3 2025-26 · Confirmed by NAO

Recommendation 9

Addressee: Ministry of Housing Communities and Local Government · Source location: Page 12, 22i

In the longer term, we recommend that MHCLG should encourage a greater number of LPAs to use the CIL, by reviewing and removing barriers to introducing it for areas where it would be financially viable.

Response position: Accepted

Delivery: In progress · Q3 2026-27 · Confirmed by NAO

Recommendation 10

Addressee: Ministry of Housing Communities and Local Government · Source location: Page 12, 22j

In the longer term, we recommend that MHCLG should explore whether there are simpler and more effective ways of mitigating the negative effects of development, including whether the benefits of Section 106 agreements could instead be captured through an expansion of planning conditions.

Response position: Accepted

Delivery: In progress · Q4, 2026-27 · Confirmed by NAO

Public Accounts Committee follow-up

1 report

The Public Accounts Committee examined this NAO report and published its own recommendations. The government responds to PAC recommendations via Treasury Minutes.