The Office for Value for Money has been a success

Last Wednesday the OVfM published its final reports, which set out a series of welcome improvements to the spending framework. Alongside these, the Treasury published an evaluation which concluded, rightly, that the OVfM has been a success.  

The OVfM made proposals that will improve the spending framework  

The OVfM’s first recommendation, made back in January, was to establish a programme of thematic value for money reviews between spending reviews. The idea was to help develop bold proposals on cross-cutting policy areas – crucially, outside the heat of the spending review process.  

The topics announced for these reviews are sensible: new models of care in the NHS and communities, youth provision, funding and delivery models for homelessness services, and maintenance of public assets. If done as genuine cross-government reviews – not just top-down Treasury led exercises – they could deliver the kind of in-depth analysis and innovative solutions that has been a recurrent weakness of the UK spending framework.  

Also published on Wednesday were plans for welcome reforms to the controls and accountability framework. This includes raising the amount of money that departments can spend without requiring Treasury sign-off (known as the Delegated Authority Limits) and moving to a single point of approvals where possible, to stop unnecessarily complex controls gumming-up decision making and muddying the waters of accountability. This follows the OVfM’s work earlier this year on governance and budgeting of ‘megaprojects’ such as HS2.  

Efficiencies have been a key focus. But rather than taking a crude, DOGE-like approach to cuts, they recommended a rolling target of 1% of technical efficiencies per year, and asked departments to develop plans for achieving this over the spending review period. This process was not universally straightforward, and not all departments met the target, but the overall result was a set of published efficiency plans that contain far more detail than we have seen in the past.

The OVfM also published 10-year projections for efficiencies to help, appropriately enough, “enable a focus on long-term value for money”, alongside further 10-year projections for four policy areas, and a basic “prototype” methodology for estimating efficiencies which could – and should – be applied more widely in the future. 

The OVfM’s unique set up and approach has paid off  

Set up as an internal Treasury unit of 20 officials, with some secondees from other departments and the NAO, the OVfM had an external, independent chair responsible for “personally” advising the chancellor and chief secretary to the Treasury. Its clearly defined role in proposing system reforms seemed to stop it being sucked into day-to-day firefighting, while the lack of constraints within this remit created space for creative proposals and active external engagement.  

The OVfM’s pre-determined one-year lifetime, and strong political backing, gave it a mandate to drive forward changes – and to do so quickly. Its dual status as both Treasury-insider and semi-independent helped it make punchy recommendations which were taken up by ministers. These were often grounded in refreshingly honest critiques of how spending is currently done.  

Undoubtedly, the timing also helped. It is easier for officials to critique how things are done when their ministers have only recently come into government. Nonetheless, ministers and senior officials across government who are struggling to overcome barriers to reform, should look to the OVfM model for inspiration.  

The one-year lifespan may have been justified if government can embed these reforms

Given the OVfM’s success, it is fair to question whether bringing it to an end last week is the right decision. It may be that the OVfM’s temporary and partially-independent status stopped it becoming ‘just another Treasury team’. On the other hand, it could have used more time to propose further – and in our view, much needed – improvements to the spending framework.  

And further improvements are still needed. Treasury officials, minsters and advisers should learn from the OVfM’s success, and adopt its inquisitive, open and bold approach to thinking about improving how government spends money.  

The key test of success will be whether the OfVM’s proposals can become embedded in how the Treasury, and government more widely, allocates and manages public spending. In practice, this means:

• Departments must deliver on their efficiency plans, accurately reporting where they have succeeded or failed to do so and learning from this to inform a repeat of this exercise at spending review 2027.  
• The Treasury should estimate efficiencies over a 10-year horizon for more policy areas between now and the next spending review, with investment then directed to delivering longer-term benefits.  
• Officials across government must feel the benefits of streamlined controls at the centre, with faster decision-making and delivery than before.  
• The next spending review, in 2027, should include proposals from the value for money reviews, to address cross-cutting problems that have often been neglected.  

The OVfM achieved a lot in its short lifetime but it is the implementation of its recommendations that matters. Ultimately, its success will be down to whether politicians and officials can now put its proposals into practice and take up the mantle of driving further system reform.