Council spending freedoms ‘restricting value-for-money judgements’

24 Jun 14

Government moves to increase the flexibility that councils have over spending Whitehall grants have made it more difficult to assess the value of town hall spending, the National Audit Office said today.

By Richard Johnstone | 25 June 2014

Government moves to increase the flexibility that councils have over spending Whitehall grants have made it more difficult to assess the value of town hall spending, the National Audit Office said today.

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Publishing an assurance statement on local government funding to Parliament, the NAO said changes at the 2010 Spending Review gave local authorities more control over their spending by removing ringfences from funding allocations.

Overall, eight Whitehall departments gave local authorities a total of £36.1bn in 2013/14 to support the delivery of their statutory duties and core functions. Of this, more than two-thirds (£25bn) was through unringfenced general grants, where the only expectation is that how authorities spend the funding lawfully. A further £7.8bn (22%) was paid in unringfenced but targeted grants, where departments expect, but cannot require, town halls to spend the money on a specific activity.

 

The removal of ringfences has given local authorities more freedom to allocate funds according to their own priorities, but the government has less information on how funds are being spent, auditor general Amyas Morse said. The Department for Communities and Local Government must therefore ensure the local accountability system that oversees local spending is effective.

 

DCLG told auditors that its role is to assure itself that the local accountability in place was effective, rather than to monitor whether spending is value for money.

 

However, this monitoring gives limited insight into how accountability happens in practice, the NAO said, and tensions remain where government departments continue to specify policy objectives for grants.

 

In particular, departments must decide whether the continuing use of unringfenced but targeted grants is appropriate in the context of a locally defined approach to achieving value for money, the report stated.

 

‘The DCLG’s arrangements to assure Parliament over funding are in transition, but the department should do more to understand whether the system for funding local government is effective in delivering value for money,’ Morse added.

Responding to the report, a DCLG spokesman said: ‘This government reduced the reporting burdens councils faced and the NAO is right to recognise that. Local authorities now have more control over their income, allowing them to find sensible savings and collaborate with local bodies to deliver improved services for residents.

 

‘Councils should be deciding how to use that money because they understand their areas local priorities best. However, a more robust, accountable and efficient way of holding local councils to account is being created through the Local Audit and Accountability Act.’

 

 

 

 

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