Councils are letting pothole-strewn roads deteriorate in an attempt to claim funding, said the transport minister.

A series of “perverse incentives” had been created in recent years that have allowed local authorities to “let standards slip so as to win more money”, Andrew Jones claimed as he unveiled a £578 million fund that will be allocated on councils’ ability to spend money wisely. This includes proving that upgraded roads remain pothole-free for as long as possible and sharing resources with neighbouring councils.

In his first speech since becoming a transport minister, Mr Jones said some councils were to blame by failing to properly fix damaged surfaces. Some £20 million worth of compensation claims are made against councils by motorists for damage to vehicles each year. He said: “We have learnt that if you hand out money while ignoring why local roads are in a bad state, you create a system of perverse incentives, and unintended consequences.”

The announcement came as Jaguar Land Rover announced it was developing technology to help drivers dodge potholes by scanning the road ahead. It plans to map roads for damaged surfaces and broken manhole covers and adjust suspension in a fraction of a second to mitigate the worst effects.