The way that the Welsh Government allocates funding to councils is partly out of date and does not always provide value for money, auditor finds.

A new Audit Wales report on local government funding has found that the formula the Welsh Government uses to allocate most funding to councils has not been ‘fully and independently’ reviewed for over 20 years.

Despite significant changes in Wales over the last 20 years, the formula and the allocation process still partly rely on data from 1991 and 2001, according to the Auditor General.

The report also found that the number, design and timing of grants to Wales’ 22 principal councils can create inefficiencies and that council funding sometimes arrives late in the financial year.

Recommendations

The report makes five recommendations to the Welsh Government to improve the value for money local government funding can achieve. They include the following:

• reviewing how the Welsh Government allocates funding to councils

• providing councils with greater certainty over future funding levels

• improving how it gives grants to councils.

Comment:

‘Many of the findings in this report reflect reoccurring themes I have seen throughout my time as Auditor General,’ said Auditor General Adrian Crompton.

‘This report finds that the way the Welsh Government funds councils does not always help them to achieve value for money – particularly over the longer term.

‘Addressing these themes is essential if the Welsh Government and local authorities are to navigate today’s extreme financial and demand challenges and deliver sustainable public services to the people of Wales.’

The Welsh Government said: 'We welcome this report by Audit Wales and will carefully consider its recommendations. We are committed to working with local authorities, to ensure funding is allocated fairly and effectively, and we recognise the importance of providing councils with greater certainty to support their long-term financial planning.

'We have already committed to reviewing the funding formula to better reflect the real costs of delivering services across Wales, and to reducing fragmented grant funding that creates unnecessary bureaucracy for councils.'