Jeffrey Matsu, CIPFA Chief Economist
Governments today face tighter budgets and rising expectations, making it crucial to deliver better outcomes with fewer resources. The UK's Office for Value for Money (OVfM) is calling for system-wide changes, urging public organisations to embed value for money (VfM) practices across their policies and projects. Thankfully, practical tools and real-world examples show that VfM assessments can greatly boost efficiency and effectiveness in public services.
The recent report "Practical Tools to Assess Value for Money" from CIPFA and the University of Oxford shares useful insights through two case studies: the London Borough of Redbridge and the Thames Valley Violence Reduction Unit (VRU). Both examples show clearly how using structured VfM frameworks can improve decision-making and spending.
In Redbridge, adopting the GO Lab-CIPFA VfM Toolkit significantly improved the evaluation of digital projects. By shifting focus from simple outputs to meaningful outcomes, Redbridge identified over £170,000 in potential savings from just two pilot projects. The toolkit didn’t just highlight cost savings; it also showed how projects aligned with bigger strategic goals like better service delivery and social impact.
However, Redbridge encountered some practical challenges, including difficulties in measuring effectiveness and equity, limitations when assessing long-term ROI, and integrating the toolkit into existing financial systems. These challenges match what HM Treasury recently emphasised — simplifying evaluations and aligning them closely with established guidelines such as the Green Book. Redbridge’s experience clearly shows that gaining buy-in, especially from finance teams, is essential to successfully adopting new VfM practices.
In contrast, the Thames Valley VRU took a broader approach, embedding VfM deeply into every stage of its programmes — from initial ideas to full implementation. This approach successfully reduced knife crime and youth victimisation while creating a culture of rigorous, data-driven decision-making across partner agencies. It tackled a common issue highlighted in the Treasury’s Magenta Book: evaluation often being an afterthought rather than central to planning.
Yet the VRU’s achievements also highlight another crucial OVfM recommendation — the need to build strong internal evaluation skills and leadership. Many organisations struggle due to limited research capacity, which can hinder wider adoption without proper support and resources.
These cases offer valuable lessons for public sector leaders and practitioners:
- Keep it Simple: Choose user-friendly VfM tools that fit easily into existing processes like the Green Book.
- Start Early: Integrate VfM assessments at the very beginning of project design to improve planning and outcomes.
- Build Capacity: Invest in training and dedicated evaluation roles and encourage peer learning to build stronger skills among practitioners.
- Align with Existing Systems: Ensure new VfM methods work smoothly with current financial practices, reducing duplication and resistance.
- Be Transparent: Openly share findings and successful examples to build trust and encourage collective improvement.
The message from OVfM and Treasury is clear — integrating VfM into government work isn't just recommended, it's necessary. But it doesn't need to be overly complex or burdensome. With the right tools, committed leadership, and collaborative learning, governments can make smarter choices, stretch budgets further, and achieve better outcomes for their communities.
Ultimately, effective VfM assessment isn't just about tracking spending — it’s about ensuring every pound makes a meaningful difference for citizens.