Luton council accused of failing to collection millions of pounds from housing developers
Cash-strapped Luton council has failed to collect more than £20m in housing developer contributions in the town, according to a borough councillor.
And he fears the figure could be approaching £140m.
The total of the original Section 106 legal agreements due to Luton Borough Council is £10.4m. But with interest and a link to the Bank of England base rate, this amount doubles to around £20m.
Luton is ranked as the 45th most deprived local authority area in England, according to the indices of deprivation (IoD) 2025.
The issue is due to be discussed at a meeting of the council’s scrutiny finance review group on Monday (October 26). A report called ‘Section 106 contributions, recovery, monitoring and future management’ will be presented to the committee, having been asked for by non-aligned Independent Barnfield councillor David Franks.
In a statement today (Friday), he explained: “The council has failed to collect more than £20m due under agreements with property developers.
“These obligations are commitments made by developers in legally binding agreements made under section 106 of the Town and Country Planning Act 1990.
“Those huge amounts are intended to cover infrastructure funding, including highway changes, extra school places and other council costs, which are made necessary only because of an approved development.
“A very longstanding problem with collecting these Section 106 payments was discovered in 2019. But not until November 2024 did the council start serious efforts to collect the cash. Why the five-year delay?” asked councillor Franks.
“A private report from December 2025, only recently made public as a result of my persistent questioning, shows £138m is recoverable. But the report presented to the finance scrutiny group next week acknowledged only £3.2m has been recovered.
“One of the questions we really need answered at the meeting is how ‘real’ is this £138m figure and what are they doing to collect it? This problem has been going on for 36 years and I’ve been pestering them for this report for 11 months.
“All I’ve faced is delays and obstructions. Now we see the astonishing figures, it’s clear why they didn’t want it published. Nothing short of a full, independent investigation into the true causes of this failure will do.
“The investigation should be carried out or at least supervised by a competent and trusted organisation, such as the council’s professional external auditors Grant Thornton LLP.”
The report to councillors suggests it “sets out the significant progress made in identifying and recovering outstanding Section 106 contributions”. This is “together with the improvements being implemented to strengthen governance, financial oversight, monitoring and management of planning obligations”.
It also “sets out the next phase of work, which will focus on embedding improved processes, maximising the use of Exacom as LBC’s central Section 106 management system, and strengthening the allocation and timely expenditure of such funds to deliver infrastructure and community benefits”.
LBC was awarded £139m over four years as part of the government’s overhaul of local authority funding earlier this year, which it saidhelps address historical underfunding and austerity cuts.
Its scrutiny finance review group regularly updates progress on recommendations stemming from when its finances were inspected by the Chartered Institute for Public Finance and Accountancy (CIPFA) in 2021.
“The CIPFA report, while praising a pro-active approach to the pressures arising from Covid, highlighted a major long-term financial challenge still facing the council,” said a report to full council the following year.
The local authority received a cash boost from the government ahead of the General Election in December 2019 to help balance its books in the 2019/20 financial year.
The council has been asked to comment.