The economic situation following the COVID-crisis has exacerbated budgetary pressures which are, along with public demand to demonstrate ‘value’ of public expenditure, often recognised as the main rationales for the current trend towards outcomes-based contract (OBCs) and Impact Bonds (IBs). In OBCs, the outcome payer contracts-out services and directly links payment to the contractor’s success in meeting targets for pre-defined outcomes – the positive results that services produce in the lives of service users and citizens – rather than the volume or quality of outputs. This mechanism is believed to allow greater flexibility around certain service activities and consequently to promote innovation and effectiveness. However, this necessitates building new capabilities and tools, as there are no bespoke guidelines and toolkits designed to take advantage of the synergies between the work needed to set up outcome-oriented programmes and the assessment of Value for Money (VfM).
To address this, we have partnered with Chartered Institute of Public Finance and Accountancy (CIPFA) on a project to develop a toolkit based on the UK’s National Audit Office standard definition of VfM. This project is aimed at public managers planning to assess VfM of OBC programmes, or any public programme with an outcome-focus, using prospective information.
As well as downloading the populated case study to get an example of the toolkit in practice, we encourage you to read the VfM toolkit accompanying guide and watch our two video tutorials below.
This project was funded by the Engagement Fellowship grant from the University of Oxford’s Higher Education Innovation Fund (HEIF). The project team consisted of Dr Mehdi Shiva, Jeffrey Matsu, Chevano Baker, Ruby Dickson, and Dr Mara Airoldi. The project team are grateful to the experts who participated in the roundtable on 1st July 2021. We are especially thankful to Neil Stanworth, Nicola Lycett, Bilal Dunoo, Janice Hadfield, and Janet Bowlzer for utilising the toolkit with real data and sharing their experience and feedback. The project team also appreciate all the help and support from both the GO Lab and CIPFA teams.
If you are interested in learning more about VfM analysis or would like to discuss and explore ways to improve value creation of public expenditure, please join our Value in Public Finance peer learning group. The peer learning group is a community of individuals and organisations interested in improving public finance and how economies perform. The group meets quarterly and is co-organised by the GO Lab and CIPFA. Click here to find out more.