MPs on the Treasury Committee have raised concerns that the newly established Office for Value for Money (OVfM) is unlikely to provide value for money. It is under-resourced, operating in too tight a timeframe and duplicates the work of other departments.
- The Office for Value for Money (OVfM) was established by the Chancellor in the 2024 Autumn Budget as part of the Government's agenda to 'root out waste and inefficiency’ and make cost savings in the Public Sector.
- It is given the remit to ‘provide targeted interventions through the multi-year Spending Review’ and make ‘recommendations for system reform’.
In a report published by the Treasury Select Committee last week, MPs raise concerns that the OVfM Chair, David Goldstone CBE, is only contracted for a year and that the unit only had 12 full-time staff in December instead of 20 as originally envisaged.
MPs say that it's difficult to see how it will have a meaningful impact on driving efficiencies in departments.
The Committee also highlight seven examples of organisations, teams and processes which have already been established to ensure that value for money is considered in public spending decisions. Those organisations are only a selection from the bodies working on value for money across Whitehall and show there is a clear risk of unnecessary duplication.
The report highlights that there is very little information on which parts of government the OVfM will work with, how it will scrutinise departments’ investment proposals and who is responsible for evaluating OfVM’s effectiveness. The Committee, therefore, calls on the Treasury to publish those details.
The Committee is also calling on the Government to publish an estimate of how much it will spend on the OVfM including any use of external consultants.
The Office for Value for Money was established by the Chancellor in the 2024 Autumn Budget and given the remit to ‘provide targeted interventions through the multi-year Spending Review’ and make ‘recommendations for system reform’. Both objectives are intended to 'root out waste and inefficiency’.
OfVM: Treasury Select Committee's conclusions and recommendations
Resources
1. The Treasury must provide an estimate of how much the OVfM will cost including the cost of any external consultants it intends to procure and then provide the actual cost of OVfM after it completes its initial work. (Recommendation, Paragraph 6)
Duplication
2. The OVfM must explain how it will interact with existing organisations and frameworks in government and the public sector that are already tasked with delivering value for money to avoid unnecessary duplication and utilise existing expertise. (Recommendation, Paragraph 11)
Value for money studies
3. The Treasury must clarify publicly by the end of January which departmental agencies or budgets will be subject to OVfM value-for-money studies. (Recommendation, Paragraph 17)
Investment proposals
4. The Treasury must clarify how the OVfM will scrutinise investment proposals in the Spending Review process. This should include the criteria by which the OVfM selects investment proposals for scrutiny. The Treasury should also provide the method by which such investment proposals will be scrutinised, including the time horizon over which projected savings will be assessed. In addition, the Treasury must clarify how it will handle proposals where the impact is not easy to quantify using existing economic methods. This may include spend-to-save measures. The Treasury must also clarify what scrutiny will be applied (if any) to investment proposals that are not selected for assessment by the OVfM. (Recommendation, Paragraph 19)
Evaluation
5. The Treasury must set out how and when it will evaluate the OVfM’s work, including specifying the metrics and key performance indicators that it will use to evaluate the overall worth of the OVfM project. (Recommendation, Paragraph 21)
Outcomes
6. To maximise concrete outcomes from this project, the OVfM must specify before it is disbanded which parts of the Government should take responsibility for implementing its recommendations and by what timetable. To that end, the Treasury must set out the OVfM’s recommendations; which of them it accepts or rejects; the reasons for such acceptance or rejection; and specify how it will monitor the effectiveness of the implementation of the OVfM’s recommendations. Based on learning, the OVfM should also recommend any improvements to existing structures and frameworks which currently aim to evaluate and deliver value for money across the Government. (Recommendation, Paragraph 23)
7. The OVfM’s task is challenging because it is lightly resourced, and it has only a very short period of time to drive tangible improvements in efficiency in departments’ spending during the Spending Review period. Its worth will depend on its ability to identify and to deliver meaningful, original new ways of securing value for money in public spending. (Conclusion, Paragraph 24)
8. At the end of its work on the Spending Review, the OVfM should provide a short report to the Committee covering the following:
1. What it reviewed and why
i) The programmes/ items that were reviewed by the OVfM;
ii) The reasons those items/programmes were selected, specifying the criteria it applied in making its decisions;
iii) The criteria it applied in assessing whether a project was “high risk”;
iv) A description of the OVfM’s input into the Spending Review process and Departments’ efficiency plans.
2. Its advice to Government;
i) A summary of its recommendations / specific advice to the Government;
ii) Its suggestions for improving the frameworks that apply to the assessment of government spending, (e.g. those referenced at paragraph 9 of this report);
iii) Its suggestions as to meaningful, original new ways of securing value for money in public spending and its recommendations for “system reform”;
iv) The OVfM’s opinion as to the major barriers / “systematic blockers” to achieving value for money in government and how the OVfM helped to overcome them in the Spending Review process;
v) Which parts of the Government should take responsibility for implementing its recommendations?
3. Lessons learned from the OVfM exercise
i) The OVfM’s view as to how effectively the Spending Review process functioned and suggestions for improvements;
ii) The OVfM’s evaluation of the effectiveness of its work, including the key “lessons learned”. This should include advice as to how best to structure and carry out targeted reviews of government expenditure in the future. The OVfM should specify what worked well, and any barriers the OVfM found in carrying out its work. (Recommendation, Paragraph 25)
About
The Treasury Select Committee is a cross-party group of MPs chaired by Meg Hillier, MP. It is appointed by the House of Commons to examine the expenditure, administration and policy of HM Treasury, HMRC and associated public bodies, including the Bank of England and the Financial Conduct Authority
External links
HM Treasury: The work of the Office for Value for Money