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Dear David,

Thank you for your letter of 10 June 2025, setting out the work of the Office for Value for ÒÁÈËÖ±²¥ (OVfM) since its launch at Autumn Budget 2024. I am grateful for the close engagement between our teams, and the use of NAO findings in informing the OVfM’s work.

The NAO is committed to supporting the effective scrutiny of public spending to improve public services and value for money. Under our 2025-2030 Strategy we will focus on helping to improve the productivity and resilience of public services and better financial management and reporting in government. Efficiencies, system improvement and investment are all critical areas for the improvement of services and outcomes in the current fiscal environment.

As the independent auditor of government spending, I look forward to following up on departments’ progress in these areas, providing accountability to Parliament for spending and performance, and supporting improvements in public services.

Driving efficiencies

As you noted in your letter, the NAO has highlighted the importance of realistic efficiency plans, supported by rigorous follow-up and clear accountability for commitments. Ensuring that efficiencies represent genuine improvements as opposed to spending cuts, developing clear plans to support targets, and ensuring rigorous follow-up of progress, are all important principles for achieving sustainable efficiencies.

The ultimate test of departments’ plans will be their ability to deliver against these welcome efficiency commitments. We have seen too often in the past that planned efficiency savings fail to materialise. In our annual financial audits and programme of value for money reports the NAO will support Parliament in following up on departments’ productivity improvements and progress against plans.

Value for money reports

Achieving value for money from public spending is essential, given the growing demands on public services and government’s fiscal constraints. I am pleased to note the work of the OVfM in taking forward work in areas for improvement I have raised such as the governance of mega projects.

The challenge for government will be to ensure that improvements are embedded and lead to systemic change. Governments have committed to learning lessons after every major project failure and yet we have still seen problems recurring in many cases. I look forward to the publication of your value for money reviews and government’s responses to your recommendations.

Scrutinising investment proposals

Achieving more productive and resilient public services will require government to invest in the transformation of outdated processes and technology. As we have highlighted in past NAO reports, public bodies have often struggled to consider invest-to-save proposals alongside other spending commitments or to deliver major projects and the transformation of services.

I understand that your assessments of the delivery risks of proposals will remain unpublished. However, I would expect to see evidence of an improved focus by departments on deliverability and risk mitigation in investment plans when the NAO considers these as part of its financial audits and value for money reports.

Similarly, a key theme of recent NAO work has been the importance of innovation in public services, and ensuring that the public spending framework creates the right incentives for well-managed risk-taking. The OVfM’s work to scrutinise investment plans should support a greater focus on the practical steps government can take to improve services, and where it can learn from both successful and unsuccessful initiatives.

Reforms

Identifying opportunities to improve value for money across government and over the longer term is essential. Much of the NAO’s work has highlighted the need for better alignment in dealing with cross-cutting issues, and the opportunities to improve outcomes and reduce spending through effective prevention. I will ensure that the NAO’s work takes account of developments in government’s approach to tackling systemic value for money challenges.

Similarly, I will consider the implications for the NAO’s work of government’s commitment to building a culture of continuous improvement, backed up by 1% annual efficiency improvements. This will require a shift in many departments, including more robust and transparent assessments of baselines, costs and performance.

I look forward to continuing the positive engagement between our teams, as you take forward the remaining work of the OVfM. Over the longer term, we will continue to support an emphasis on value for money in the public spending framework, accountability to Parliament, and improvements to public services.

With kind regards,

Gareth Davies