MEASURING COST- EFFECTIVENESS AT A LOCAL LEVEL Pamela Meadows National Evaluation of Sure Start Team

WHY DOES COST-EFFECTIVENESS MATTER? Money can only be spent once If a particular service is not achieving what it sets out to do (improving life for children and families) that money could be better spent in future A service could be reduced or discontinued and extra resources out into services which are working, or it could be delivered in another way Positive evidence of cost-effectiveness provides support for a continuation of Sure Start services beyond the initial contract period

KEY ISSUES 1. Why evaluate cost-effectiveness? 2. When to evaluate? 3. What should they evaluate? 4. How to evaluate? 5. Who should evaluate?

WHY MEASURE COST EFFECTIVENESS AT A LOCAL LEVEL? Because it is (and always has been) part of the contract with the Sure Start Unit It is an important management tool that should inform local decisions about meeting local needs It gives programmes information that they can use in discussion with mainstream agencies which are subject to Best Value The national evaluation looks at overall outcomes not the detail at the way money is spent locally

HOW SHOULD THIS WORK? Each programme needs to understand: 1. What they are actually spending their money on 2. What happens as a result of spending that money 3.How much is being spent on services directed towards each of the targets 4.Could these outcomes be achieved in another way which is cheaper 5.Could they spend the same amount of money in another way and achieve more in the process If the answer to Q4 or Q5 is yes, if they reallocate their resources they should achieve better results

WHEN SHOULD THIS HAPPEN? If it is done too early there are no outcomes to consider If it is done too late, there will not be time to reallocate resources in the light of evaluation findings Ideal time is probably after around 18 months – 2 years of operation, with periodic reviews after that

WHAT SHOULD BE EVALUATED? According to Sure Start Unit guidance all major services should be evaluated Programmes having trouble getting started might want to begin by concentrating on one or two key services (home visits for new babies, centre- based childcare) Alternatively, programmes might start by focusing on total spending aimed at each target

HOW TO MEASURE COST-EFFECTIVENESS: STEP 1 Identify the services that are being provided for children and families in the Sure Start area, and what resources are being used in providing those services? Resources includes all resources, not just Sure Start grant (eg sponsorship, volunteers) Most information should be available within the Sure Start programmes own financial information system, but some may be held by partner agencies

HOW TO MEASURE COST-EFFECTIVENESS: STEP 2 Allocate all costs (including an appropriate share of overhead costs) to individual services Costs associated with a particular service (eg supervising home visitors) are allocated to that service The cost of shared resources (eg a centre) should be shared between users on a sensible measure eg hours of use Allocate overhead costs in proportion to other costs. If home visiting accounts for 25% of direct service costs then it should also have allocated to it 25% of overhead costs

HOW TO MEASURE COST-EFFECTIVENESS: STEP 3 Take the total costs of each service and divide by the number of units of service delivered (eg home visit, or full-day or half-day daycare sessions)

HOW TO MEASURE COST-EFFECTIVENESS: STEP 4 Consider what the service which is being delivered is trying to achieve. Relate your unit costs to outcome targets both national and local Different elements of Sure Start are intended to achieve different objectives, but often a single activity (eg home visits) covers more than one objective. If your home visits are directed 70% at child development and 30% at child protection you allocate your costs in those proportions to those targets All Sure Start programmes have national targets, but most have local targets as well. You should include these too.

HOW TO MEASURE COST-EFFECTIVENESS: STEP 5 For each target (eg child development) add up the costs of providing different services related to that target and compare with other approaches There are three sorts of comparisons: Compare costs with other providers (eg nurseries) or national averages (eg Unit Costs of Health and Social Care) Costs of different ways of addressing the same target (eg extra home visits v incentives to attend clinics) Benchmark against other programmes by agreeing to share information.

RELATING EXPENDITURE TO TARGETS TOTAL COST Child Protection Smoking Speech & language Workless households Home visiting 67, Child care379, Parenting support 12, Other services 87, TOTAL546,

HOW TO MEASURE COST-EFFECTIVENESS: STEP 6 Consider whether there are any savings that can be attributed to any of the achieved targets, and if so, provide an estimate for the value of those savings Savings are not very likely at this stage, although there may be some (eg in health care). The aim of Sure Start is not to generate early savings but to improve the long- term life chances of children The Unit Costs of Health and Social Care* is an invaluable source for identifying the value of savings *available from the Personal Social Services Research Unit at the University of Kent tel ,

HOW TO MEASURE COST-EFFECTIVENESS: STEP 7 Write a report for your local programme on its cost-effectiveness performance The purpose of the report is to have a useful input into local decision making. It must address local needs rather than use a standard format You do not need to share the full report with anyone outside your programme, although you do need to show the Sure Start RDO that you have evaluated the cost-effectiveness of your programme and taken account of the findings in your plans for the future

WHO SHOULD EVALUATE? Programme generally holds most information, so some programmes are planning to do it internally Local evaluation team may be able to do it but may not feel they have necessary skills or access to information A local university might have someone with the right skills

COST-EFFECTIVENESS ANALYSIS IS AN AID TO DECISION MAKING NOT A THREAT Sure Start is expected to have substantial net costs in the early years But in order to justify the extra costs it has to be more effective than existing provision If Sure Start resources are not achieving their objectives, then the well-being of children and families will be better served by spending the money another way.