And research conducted by the BBC has found that many councils are having to return cash to developers after failing to use the contribution within stipulated time frames.

Researchers found that nearly a third of the S106 pot has still not been allocated to specific community projects.

But cash-strapped councils have argued that the payments are often being kept to be spent at the right time on specific schemes.

Freedom of Information requests were submitted by BBC reporters to all 353 local authorities in England. Of the 316 that responded:

• Hertfordshire County Council holds the most “unspent” money with £56m
• Swindon Borough Council has the most “unallocated” money with £18m
• Essex County Council returned the most cash to developers, with £1.2m in the past five years

A Swindon council spokesman said that Swindon was one of the fastest-growing towns in the country building over a thousand homes each year.

“This inevitably means that the council has a significant amount of Section 106 money which is waiting to be spent at the right time on specific schemes,” he said.

“Although more than half of the council’s Section 106 money has already been allocated to specific projects, there are many reasons why it isn’t always possible to do this quickly.”

John Stewart, director of economic affairs at the Home Builders Federation, said local authorities had an obligation to spend received funds to benefit their communities.

“It is also imperative that they transparently account for these contributions to their residents who must see and experience the true benefits that come with the building of new homes in their area.

“Otherwise residents will simply see new housing placing additional burdens on local facilities and services, unaware of the compensating benefits from S106 agreements, whether these are purely financial contributions, or benefits in kind.”

Mike Jones, who is the chairman of the Local Government Association’s environment and housing board, said the process behind assigning the Section 106 money was complex.

“It is utterly wrong to say councils are ‘sitting on it’,” he said.

“This is all about making the right long-term investment decisions to deliver the services that communities desperately need.”