MPs want to see central government keep a closer eye on how local authorities spend highways cash.
Margaret Hodge (pictured), Chair of the Committee of Public Accounts, said: "The Department for Transport makes a substantial contribution towards the funding of local transport services, but has no clear way of controlling how this money is used.
"The Department provided £2.2 billion to local authorities in 2011-12. But £1.2 billion of this, mainly for highway maintenance and transport projects, is not ring-fenced and the Department does not monitor whether it is actually spent on transport or achieving its intended purpose.
"Local authorities are facing significant budget cuts but the Department does not have the information to assess the impact on transport services, or to make comparisons between local areas to identify councils that are underperforming.
"It is also unclear how the Department would identify a failure or unacceptable deterioration in services, or when and how it would intervene.
"Councils also raise funds from local people through parking charges. The Department should ensure that this money is actually used for local transport, and put in place transparent mechanisms for doing so.
"We are not convinced that government has thought through the risks of devolving more control over the funding of major transport projects to a local level. For example, the Department is confident that local bodies will naturally cooperate to fund and implement projects. We believe this confidence may well be misplaced.
"The risk is that local transport bodies, under severe financial pressure, will not take sufficiently strategic and joined-up decisions, threatening national or regional transport funding objectives."
Hodge was speaking as the Committee published a report on the basis of evidence from the Department for Transport, local government and academic representatives which examined the Department's funding for local transport.
