The 2026 update to the UK Government’s Magenta Book signals a shift in how value for money (VfM) is understood and assessed. Moving beyond narrow cost-efficiency metrics, it places greater emphasis on flexibility, real-world learning, and a more holistic view of value.
Beyond cost-benefit alone
Value for money has been substantially reframed. Rather than relying primarily on traditional economic techniques such as cost-benefit analysis (CBA) or cost-effectiveness analysis (CEA), VfM is now defined more broadly as a balanced, evidence-based judgement about the best use of public resources. This includes non-monetisable outcomes and draws on methods such as the 5E’s framework and rubrics-based approaches.
At Itad, we have long integrated considerations of cost, effectiveness, equity and systems-level change to inform real-world decisions. Our approach has evolved over two decades of applied experience in complex and resource-constrained environments where traditional economic tools alone are limited – for example where:
- Outcomes are long-term or uncertain
- Value is intangible (e.g. behaviour change, institutional strengthening)
- Interventions operate at a systems or portfolio level.
In these contexts, single-point estimates of value can obscure as much as they reveal. Our early work on VfM began focusing on the 3E’s – economy, efficiency, and effectiveness – capturing the value of inputs, outputs and outcomes, and enabling a broader range of evidence to be used, including for non-tangible or uncertain outcomes.
Over time, this developed to include aspects of equity (how benefits are distributed) and cost-effectiveness (whether the value delivered justifies the resources invested). This expanded approach enables a more nuanced assessment of value, particularly for complex, system-level or socially-driven programmes.
In this sense, many of the updated methods are not new to Itad, but well-established in our practice.
What this means in practice
While the shift in VfM approaches is important, it is not straightforward to implement. Common challenges for policy professionals and evaluators include:
- What counts as sufficient evidence when outcomes are qualitative or long-term
- How to balance competing perspectives on value across stakeholders
- How to make VfM judgements transparent and defensible
Our VfM assessment of The Global Challenges Research Fund (GCRF) demonstrated the successful implementation of a portfolio-level evaluation (recently highlighted in this blog by Julian King on Value for Investment) in a complex environment. Key lessons included:
- Co-creation is critical. VfM criteria need to reflect programme realities, not imposed standards
- Embed VfM early. Retrofitting it at the end limits its usefulness
- Focus on portfolio value. Assess whether the overall portfolio (spanning diverse grants like research centres, networks, and fellowships) delivers value, rather than forcing comparisons across diverse projects using a single cost-effectiveness metric
In 2023, Itad also developed and piloted a VfM toolkit with Integrated Security Fund (ISF) programme teams across Africa. The aim was not just to assess value retrospectively, but to embed VfM thinking into ongoing decision-making.
The toolkit offered a straightforward, practical approach to embedding VfM into programme monitoring, evaluation and learning (MEL) systems. It helped generate VfM evidence for learning, supported test-and-learn approaches, and ultimately enabled the portfolio to maximise the impact of its investments. While designed for ISF teams, its principles and practical steps are applicable to any programme or organisation seeking to assess and demonstrate the VfM of their investments.
This approach highlighted that simpler frameworks are more likely to be used. Teams need tools they can apply in real time, not complex models.
From assessment to action: making evaluation a decision tool
Our experience applying VfM approaches reinforces a central implication of the Magenta Book update: VfM is no longer just a reporting requirement – it is a core management tool. This makes it essential to embed VfM considerations from the outset, linking them closely to appraisal, design and ongoing delivery.
As we note in our recent blog on the Green Book update, our practical application of the 5E’s and rubrics-based approaches can help teams developing VfM monitoring and assessment frameworks as part of appraisal by helping teams to:
- Define what ‘good value’ looks like for an intervention, and establish clear criteria for assessing progress
- Identify the assumptions that most influence VfM and require monitoring
- Create opportunities for revisiting appraisal decisions during delivery
- Enable in‑period VfM assessments that build on, rather than duplicate, initial analysis.
The takeaway
The Magenta Book updates signal a broader shift in how VfM is understood: from a retrospective and sometimes narrow judgement of whether something delivered value, to an ongoing process that actively informs decisions about how value is created.
But realising this shift is not automatic. Improving VfM in practice depends on how these principles are applied day to day.
From our experience, organisations that succeed tend to:
- Treat VfM as a live, ongoing judgement, not a one-off or final assessment
- Accept greater ambiguity in how evidence is generated and used
- Co-create approaches with key stakeholder to develop robust rubrics
- Invest in relationships between policy, delivery, and evaluation teams
In this sense, the shift is not just methodological, it is cultural.
If these themes resonate with your work, we’d be keen to connect and exchange insights on what it takes to implement these approaches effectively in practice.
