Billions of pounds paid by builders to boost local services remains unspent, with more than a quarter of the cash unused after more than five years, research from the House Builders Federation (HBF) has claimed.

The HNF estimates that local authorities in England and Wales are sitting on more than £8bn of infrastructure payments made by developers, including over £6bn from Section 106 agreements and almost £2bn raised through the Community Infrastructure Levy (CIL).

The research is based on a Freedom of Information (FOI) survey, which received responses from 208 local authorities. The responses show that, on average, councils hold £19m in unspent Section 106 infrastructure contributions.

Developer contributions are paid to the local authority to fund affordable housing, infrastructure and amenities to improve the local area for new and existing communities, as part of the process of granting planning permission.

The findings also showed that 26% of the unspent contributions have been held for more than five years, suggesting that around £1.6bn of funds has been sitting in council bank accounts for more than half a decade.

The top 20 councils collectively hold around £2bn, with Oxfordshire County Council holding the largest amount – £288m – of unspent Section 106 monies among respondents.

Section 106 agreements often stipulate that they can be returned to the payee if the sums have been held too long as projects are deemed unlikely to be delivered meaning that communities do not receive all the benefits of development that local authorities have committed to.

The results of the FOI requests showed that 80 local authorities – around a third of all those who responded to this question – have returned Section 106 money to developers in the past five years, with a total of £20.6m being returned in total.

The HBF is calling for greater transparency so that council Infrastructure Funding Statements (IFS) clearly outline the reasons why infrastructure is delayed and how long money has been held for. Local authority planning department budgets must also be placed on a sustainable footing to ensure there are sufficient staff and resources for oversight and monitoring of developer contributions.

Neil Jefferson chief executive of the HBF, said: “Each year developers contribute around £7bn to local authorities for the provision of local infrastructure, affordable housing and education, recreational and health facilities but some councils are increasingly failing to invest this cash into the services that so desperately need it.

“Investment in new housing delivery brings unrivalled economic and social benefits to communities but too many of these advantages are going unseen by local people. With the Government desperate to find money to invest in infrastructure to drive growth, it is nonsensical to have billions sat in council bank accounts.

“Furthermore, a lack of infrastructure provision is often cited as a reason to oppose development, yet this pipeline of billions of pounds of unspent infrastructure funding is too often underappreciated in debates about the impact of new development.

“Whilst appreciating the pressures and constraints on councils, we simply have to find a better way to ensure this money is spent promptly to benefit local communities, support local services and drive growth.”