Councils need to do more to ‘follow the public pound’

An Accounts Commission report published today shows that councils need better information about their funding of external organisations and what is obtained for the money provided.

The report ‘Following the Public Pound’ found that Scottish councils provided £220 million to 14,000 organisations - including companies, trusts and voluntary organisations - to deliver a wide range of council-related services such as support for people with disabilities and the management of leisure centres.

To ensure that funding is used properly and value for money is obtained, councils need to be able to ‘follow the public pound’ to the point at which funds are spent by external organisations. The report sets out the amounts involved and where the money is targeted.

The Commission found that no council fully complied with guidance which sets out best practice principles when councils fund external organisations. There was a high level of performance in nine councils, moderate performance in 18 councils and a low level of performance in five (see table overleaf). Councils in the ‘low’ category have some way to go to achieve full compliance with the guidance.

In particular, there is scope for councils to improve their financial and performance monitoring. Councils should apply a risk-based approach taking account of factors such as the amounts of money involved, the size of organisations funded and how they are managed.

Accounts Commission member, Keith Geddes, said: “Councils are increasingly funding external organisations to provide services in important areas such as social work and leisure. There are examples of good practice but we are concerned that no council fully complied with the guidance.

“All councils need better information about their funding of external organisations, the intended benefits and what is obtained for the money provided. They need to tailor their approach to monitoring how the money is used and ensure they can ‘follow the public pound’.”

The report recommends that councils:

  • put in place a register of their funding to external organisations
  • develop a corporate policy on free or subsidised use of council properties, vehicles and facilities by the organisations they fund, as part of their overall approach to asset management
  • take a risk-based approach to dealing with the organisations they fund, and focus their resources for scrutiny accordingly
  • explore opportunities for joint working with other councils.