Ministers need to exert more control over £250 billion of taxpayers' money being spent each year by "arm's-length" bodies, a powerful Commons committee has warned.
The Public Accounts Committee (PAC) has expressed concern about the levels of oversight on more than 460 agencies, such as HM Revenue & Customs and NHS England.
The PAC warned that the Government has "no clear criteria" for deciding which activities are best done by Whitehall departments and which should be left to outside bodies.
Lack of clear lines of accountability mean it is often not obvious who to hold responsible for decisions and failures, the MPs stated.
The PAC report noted that "the Cabinet Office needs to use its position at the centre of Government to ensure that departments improve the way they manage their business through arm's-length bodies."
The probe found that oversight by Whitehall departments of arm's-length bodies was "inconsistent", and they do not always have the information needed to understand how such organisations are performing and delivering for the public.
Departments are also missing opportunities to improve services for customers by capitalising on the operational experience and know-how of their arm's-length bodies when developing policy, the report said.
Committee chairwoman Meg Hillier said: "The Cabinet Office describes today's diverse network of arm's-length bodies as 'an accident of history'.
"While this 'accident' may not have been preventable you would certainly expect any replacement system, designed from scratch today, to look very different.
"It underlines precisely why the Cabinet Office must ensure these bodies – some of which are responsible for delivering large and vitally important swathes of public policy – are subject to consistent and effective oversight.
"That must start with Government setting out clear criteria for how business is conducted, with clear lines of accountability on spending and performance. The public need to know who is spending money on their behalf, and why.
"When the Government is clear this should involve arm's-length bodies, it must do more to harness the expertise these bodies can bring to policy-making – as well as the feedback they collect on the frontline from taxpayers.
"The Government cannot wash its hands of accountability simply by delegating its business and this committee will expect to see the Cabinet Office taking meaningful steps to strengthen oversight in this area."