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The ‘three Es’
The National Audit Office uses three criteria to assess the value for money of government spending:
- Economy: minimising the cost of resources used or required – spending less
- Efficiency: the relationship between the output from goods or services and the resources to produce them –spending well; and
- Effectiveness: the relationship between the intended and actual results of public spending – spending wisely.
Value for money is defined as the optimum combination of whole-life cost and quality (or fitness for purpose) to meet the user’s requirement.
The highest-level controls on public spending are:
- Regularity: financial transactions should be in accordance with the legislation authorising them, regulations issued by a body with the power to do so under governing legislation, Parliamentary authority and Treasury authority
- Propriety: the concern with Parliament’s intentions as to the way in which public business should be conducted, including the conventions agreed with Parliament and, in particular, the Committee of Public Accounts.
More detailed definitions of these terms are given in the Glossary.