We know exactly how much community cash is owed - EDDC


- Credit: Archant

District chiefs have failed to identify when they are owed ‘significant amounts’ of community cash from developers, auditors have concluded.

KPMG investigated after claims East Devon District Council (EDDC) could not demonstrate it was offering value for money as it cannot account for the ‘true amounts’ due from section 106 agreements.

The cash is meant to mitigate the impact of developments by funding improvements within communities such as ‘affordable’ housing or new sports facilities – but the authority has ‘weaknesses’ in monitoring when payments are due.

KPMG looked into the issue after an elector submitted a Freedom of Information request to learn how much section 106 is owed from each of the last 10 years, which EDDC could not provide.

The auditors found no evidence this has led to financial loss and EDDC has now accepted that improvements are required to track progress of the payments.

In a report to EDDC, the auditors said: “While we have recognised some appropriate controls, we have concluded that there are weaknesses in the council’s arrangements for monitoring developer contributions due to the council through section 106 agreements.

“Although we have found no evidence that these weaknesses have led to any financial loss, they have led to the council failing to identify, on a timely basis, significant amounts which have become payable from developers – particularly Cranbrook – and consequently to the understatement of these amounts in the council’s financial statements.”

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The net understatement amounted to £227,000 last year.

There was a particular ‘gap in information’ in Cranbrook, where developers are supposed to update EDDC quarterly on the number of homes completed, sold and occupied.

Only the number of completions has been provided - and only on an ‘ad hoc’ basis.

An EDDC spokesman said: “We know exactly how much section 106 money is owed.

“However, we only hold that information by development and do not hold a total of all monies outstanding across all developments.

“This is currently being addressed.

“The onus is on developers to meet the obligations that they have signed up to in the S106 agreement.

“However, we do also chase up and collect payments where they are not made in good time.

“Where payment is made late then the developer is required to pay interest on top of the initial contribution.”

KPMG said as the recipient of the section 106 cash, councils have a self-interest to ensure this is appropriately monitored.

The EDDC spokeswoman told the Herald that in the last 12 months, more than £500,000 has been collected from developments in Sidmouth.

All £1.5million has now been collected from the Sanditon apartments – in place of the Fortfield Hotel – and some is being spent on ‘affordable’ housing in the town.

The council currently holds £5.6million in section 106 payments that have yet to be spent.