Councils are not being adequately held to account over how they spend £36.1bn of yearly Government grants, MPs have warned.
Lack of monitoring over un-ringfenced grants mean there is little evidence to show whether funding is achieving its stated objective, a report from the Public Accounts Committee (PAC) has today concluded.
PAC chair Margaret Hodge warned the Government was 'over reliant' on councillors and service users to provide scrutiny, despite no convincing evidence that 'armchair auditor' members of the public are being empowered to hold local authorities to account.
As part of the Government's drive to hand councils more flexibility over funding, some £7.8bn of un-ringfenced grants were handed to town halls over 2013/14. However, departments did not monitor how £2.8bn of this was being spent.
Unmonitored funds included the Department for Work and Pensions' Local Welfare Provision Grant - worth £178m - and £320m of cash from the Department for Transport.
MPs said the Government was unable to assess whether such funds were achieving intended outcomes or represented value for money.
With the imminent abolition of the Audit Commission, Hodge added that new arrangements for the auditing of local authorities also threatened 'to weaken accountability'.
'We are also concerned that the public might be less engaged with decisions on services that cost a lot, but do not affect them personally, such as vitally important adult care and children's services,' she said.
The report added that the accountability system was also 'not aligned' with funding for new local bodies such as Local Enterprise Partnerships and Health and Wellbeing Boards.
Local government minister Kris Hopkins said: 'We make no apologies for scrapping the last administration's avalanche of targets, top-down blanket inspection and micro-management of local government.
'However, robust auditing remains in place and a more accountable and efficient way of holding local councils to account is being created through the Local Audit and Accountability Act.'
