Value for Money (VfM)

 

Value for money

What is value for money?

The aim of the local government Value for Money agenda is a simple one – all councils must use their resources in the best possible way to deliver better public services in line with the priorities of local people. 

The Audit Commission defines Value for Money as the 'Relationship between economy, efficiency and effectiveness' where:

  • Economy is reducing costs wherever we can
  • Efficiency is getting the most out of our money
  • Effectiveness is achieving better outcomes and impact for the public

VfM – The Value Chain

'The relationship between economy, efficiency and effectiveness.'

The value chain

'Value for money is high when an optimum balance is achieved; low costs, high productivity and successful outcomes': IDeA.

We are judged on Value for Money through the Use of Resources element of CPA. 

 

What are we doing?

To ensure that we improve VfM we must continue to make sure our costs compare well with others, identifying and challenging areas of high spend, ensuring that the money we do spend results in high quality services that meet and satisfy local needs. 

As well as ensuring costs are in line with performance; we need to find out if the 'best in the class' are doing things differently, assessing the different approaches being adopted when delivering services allowing us to focus and prioritise more, as well as identifying whether services can be delivered more efficiently through other providers making better use of the resources that we have.

Value for Money must be part of the day job when we all strive for continuous improvement, so we always assess VfM implications when making decisions and delivering services.  Each member of staff can contribute to delivering VfM and responsibility is not just restricted to senior managers or those with financial responsibilities.

An example of VfM improvements could be through a significant reduction in staff sickness absence, this would deliver substantial VfM savings as more productive time could be spent delivering services.  In areas of the Council where we need to provide direct cover (care homes for example) this would also reduce agency or overtime costs needed to cover shifts.  If our staff absence rates were reduced by one day per person across the whole council, the value of the additional productive time would be around £0.5 million a year.

If you have any queries please contact Dan Patterson (Value for Money Manager) 0191 424 7495.

 

Council and Democracy Homepage