The government cannot say whether all the charities that have been handed grants from the Libor fines fund spent the money as intended, or what impact it has had, according to the National Audit Office.
In a report of its investigation into the management of the Libor fund, published today, the spending watchdog says the government had not been evaluating the impact of the grants as they were handed out.
The Libor fund was set up after a number of UK, US and EU banks were fined for manipulating the London Interbank Offered Rate, or Libor, in 2012. The government pledged to give the proceeds from the fines, as well as money taken from banks as fines for manipulating the foreign exchange markets in 2015, to good causes.
Up to this month, the NAO found that of the £973m total fund the government had committed £773m to good causes, with the remaining £200m pledged to the Department for Education to provide apprenticeships.
Of the £773m, £181m had either not yet been promised to a specific scheme or spent, with the rest pledged largely to military and emergency services charities.
HM Treasury and the Ministry of Defence, which are administering the grants, have handed out £592m through 729 different grants to 639 different charities and causes, including administration costs of £0.6m.
The report says the MoD was aware that £57m of the grants it handed out did not come with terms and conditions attached, but should have done so in order to fulfil grant-making best practice.
"HM Treasury and the MoD cannot yet confirm that charities spent all grants as intended," it says.
The report adds that the Treasury had commissioned the MoD in January 2017 to carry out a retrospective review of all grants awarded since 2012 to seek assurance on how the grants were spent and provide information for future monitoring.
"The departments hold differing levels of information on grants depending on when they were paid and from what scheme," the report says.
"MoD is currently gathering information from grant holders for 236 of the 729 grants. For the other 493 grants, the departments believe the monitoring requirements already built into the schemes under which the grants were given is sufficient to complete the review."
The review, which will check every grant made for evidence that funds have been used appropriately in accordance with individual grant aims, look for fraudulent activities and flag up any problems, is expected to be completed by December.
The report says: "The government cannot yet demonstrate the impact the Libor grant fund has had as it has not been evaluating the impact of the grant schemes on the charity sector. However, it has committed to completing an external evaluation in 2018 once it has completed the retrospective review in December 2017."
By the time this evaluation is complete, more than 80 per cent of the fund will have been awarded, according to the report.
A spokesman for the Treasury said the government was committed to ensuring Libor fine funds were used in the manner for which they were intended.
"This includes a routine review throughout the period of the grant to ensure that value for money is being achieved," he said.
The spokesman said the funds had been invested in important initiatives such as helping veterans get the support they deserved.