Background to the report

Grants are one of a range of funding types that government can use to provide funding to businesses, non-profit organisations, individuals and other parts of government.

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General grant spending increased significantly in real terms during the COVID-19 pandemic (from £39.4 billion in 2019-20 to £155.6 billion in 2020-21). It has since decreased but is still higher than pre-pandemic levels.

We last reported on government grants in 2014. We found that government had given less attention to grants than to other funding mechanisms, despite grant funding being higher in value.

Scope of the report

We examined how effective central government is at designing and delivering general grant schemes, and whether it uses lessons learned from past schemes to improve future delivery, including:

  • which areas of the grant lifecycle, from design to evaluation, offer the greater opportunities for improvement
  • what opportunities there are for improving coordination, reducing duplication and consolidating grant awards
  • how effective the Grants Management Function is at giving grant practitioners (that is, officials involved in designing and administering grant schemes) tools to improve the quality and efficiency of their work
  • what examples of good practice there are that could be taken up more widely

We did not examine grants-in-aid, formula grants, grants awarded by local government and the devolved administrations, and grants to overseas entities, including official development assistance. While we examined specific grant schemes as part of this work, we did not assess the value for money of individual schemes.

Conclusions

Government has made significant progress in addressing the issues we raised in our 2014 report. The Grants Management Function has developed a wide range of guidance, tools, support, training and best practice sharing that cover all stages of the grant lifecycle.

Departments have made progress improving capability and begun to realise efficiencies in grant-making, reporting a year-on-year increase in median grant capability between 2018-19 and 2021-22. However, grant-making is not consistently delivering value for money across departments as significant variations in capability persist.

Grant-making departments and arm’s-length bodies can simplify the grants landscape by combining schemes and awards, which government has started doing for grants to local authorities. There is more that the Grants Management Function and departments can do to improve grant-making, achieve efficiencies, support grant practitioners and enhance user experience.

This includes identifying the barriers to the take-up of shared digital tools; addressing these barriers to achieve less reliance on manual processes and greater consistency in grant-making across government; further developing capability; and placing more emphasis on planning proportionate monitoring and evaluation as part of grant design.

These changes could save money for both government and grant recipients and help ensure that the tens of billions of pounds government spends each year on general grants provide optimal value for money.

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