Millions of pounds earmarked for community projects in Leicestershire may never be paid.

Contributions promised to councils by house builders have dried up because of the economic downturn.

Some companies have collapsed while others are calling on councils to be excused from paying for play equipment, transport benefits and community facilities.

They say projects will not be worth building if all the profit is taken by payments under Section 106 agreements which are imposed so that the builders will pay for facilities needed by the people moving into the new homes.

County councillor Kevin Feltham said: "Hundreds of thousands of pounds promised for community facilities in my area will not be paid because of the current climate. It could well run into millions in Leicestershire when it is totalled."

He said: "Kibworth was promised a six figure sum in return for a major house building project. But progress on the site has been very slow and the payments, which come due when houses are completed and occupied, may be delayed for several years making it difficult, if not impossible, to produce local plans to spend the money."

Harborough District Council has adopted a formula so that Section 106 payments can be waived or reduced in future.

It is calculated on developers making a 15% profit before demands are made.

Vice chairman of the Melton Borough Council development committee Councillor Pru Chandler said: "I wonder if the system is workable at this present time. We have earmarked an area of land north of Melton for 1,000 homes.

"As part of government guidance, 40% have to be "affordable". That means if the builder has to contribute to community facilities in Section 106 payments that will fall on the 60% of homes which will have to be that more expensive to make it viable."

Planning officers at Blaby district council and Hinckley and Bosworth Borough Council have urged a relaxation of the payments for community facilities.

Home Builders Federation spokesman Steve Turner said: "Local councils have to be realistic of what is affordable these days. In many cases demands for community payments for education, playgrounds and transport and obligations to provide affordable housing, make projects simply unviable.

"We are having companies walking away from projects simply because it makes no financial sense to continue because of the hefty demands from councils.

"That leaves much needed housing not being built."