VALUE FOR MONEY AND EFFICIENCY SAVINGS

1 Value for money may be defined as achieving economy, efficiency and effectiveness. Those in turn may be defined as:

· Economy - minimising the cost of resources acquired or used, having regard to appropriate quality


· Efficiency - maximising the agreed outputs obtained from a given level of input, again having regard to appropriate quality


· Effectiveness - ensuring that the outputs lead to the intended results of the activity.

2 The Audit Commission's strategic plan has a clear commitment to make value for money a more significant priority in its assessment and assurance activities. This was reflected in its recent consultation on the revised framework for Comprehensive Performance Assessment (CPA) for 2005. With this in mind, and having regard also to the 2.5% efficiency savings target built into the Spending Review 2004, and the implication of Gershon's independent review of public sector efficiency, the Cabinet has developed a series of measures designed to ensure that value for money is at the forefront of decision making. These are detailed in nature, but in summary the Cabinet requires:

· value for money considerations to be formally built into procurement decisions and into the annual budget setting process


· Cabinet Members and Executive Members routinely and explicitly to consider value for money considerations in their decision making


· Best Value and other reviews to demonstrate improvements in value for money and competitiveness


· mechanisms to be built into the three year budget cycle in line with the definition of value for money improvements, as set out in paragraph 1.

3 It is understood that the Audit Commission is piloting its new approach to value for money and will publish a consultation paper on the topic soon. The measures put in place, as outlined above, are partly in anticipation of this, and can be refined in the light of the consultation documents when budget guidelines are set in December.

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