Funding for Welsh councils needs to be clearer, earlier, and based on up-to-date evidence, the Auditor General has said.
The way the Welsh Government funds councils does not always help them to make the most of the funding they get, according to a report from Audit Wales.
It calls on the Welsh Government to make sure its approach to funding councils is timely, based on accurate information and gives councils more clarity over the funding they are likely to get in the future.
The Funding Councils report looks at how the Welsh Government allocates funding to Wales' 22 principal councils. Councils rely heavily on this funding to deliver essential services for their communities.
The report explains that the way funding is allocated by Welsh Government does not always help councils to get value for money. It found that councils need clearer estimates about the amount of funding they may get in future to help them make financial plans. The report also calls for both councils and the Welsh Government to plan for different possible funding levels, so they are better placed to respond when funding levels are confirmed.
The formula and process that the Welsh Government uses to allocate most funding to councils has not been fully and independently reviewed for over 20 years. The report notes that some indicators used in the formula rely on data from 1991 and 2001. This is despite the significant changes across Wales over that period.
The report explains that the number, design and timing of grants can create inefficiencies. Councils sometimes receive funding late in the financial year, increasing the risk that decisions are made quickly and public money is not used strategically.
The report makes five recommendations to the Welsh Government to improve the value for money it and councils achieve. They include reviewing how it allocates funding to councils, providing councils with greater certainty over future funding levels, and improving how it gives grants to councils.
Auditor General Adrian Crompton said:
“Many of the findings in this report reflect reoccurring themes I have seen throughout my time as Auditor General. 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.”
