Alice Pugh defines and explains why business cases are important for higher education research funders, government department funders, and local policymakers.
This blog was first posted by the National Civic Impact Accelerator, based at Sheffield Hallam University. This is the first blog in a series looking at what a business case is and how to develop one at a Univerity.
Business cases are often used to show there is a compelling and worthwhile case to initiate a viable project. All projects should show their value for money, added value, viability and deliverability to get the go-ahead. Universities frequently use business cases to help get projects off the ground, whether that be for a large capital investment, or for a community-based initiative. This blog will outline the good practice guidance for how universities should develop a business case for civic university work.
HM Treasury defines a business case as a management tool which is developed over time as a living document as the proposal for a project or programme develops. The Business Case keeps together and summarises the results of all the necessary research and analysis needed to support decision-making transparently. In its final form, it becomes the key document of record for the proposal, also summarising objectives, the key features of implementation management and arrangements for post-implementation evaluation.
The HM Treasury Green Book five-case model is the required framework for considering the use of public resources, to be used proportionately to the cost and risks involved, whilst taking into account the context in which a decision is set to be taken. For HM Treasury to approve funding it is usually a requirement that a business case be complied, to prove that the programme demonstrates the best value for public money.
According to the Treasury Approvals Process for Programmes and Projects, HM Treasury scrutinises and approves any project and programme spending outside the agreed Delegated Authority Limits (DAL) set by the Treasury. Spending for which a business case must be conducted includes:
- All major projects or programmes
- Novel, contentious or repercussive spending
- Expenditure outside a Department’s delegated authority limit, as defined in Departments’ delegated authority letters
This is to ensure that all spending proposals reflect the priorities of the government of the day and meet the four criteria for the use of public funds. To this end, all spending proposals must be developed and presented in accordance with the Green Book and Business Case Guidance.
Why are business cases important to universities?
Higher Education research funders
The majority of Higher Education scientific research funding comes from public funding, with 62% of funding for research coming from public funding, with the majority of the UK’s main higher education funding bodies being publicly funded, including, UKRI and Research England. On occasion therefore, when applying for funding through bodies such as this, there is a likelihood that for some funding bids, a business case may need to be completed or a bid which contains some or all of the components of a business case. Therefore, for generating funding it can be extremely beneficial for universities to build capacity and understanding of how to tackle business cases in the most effective way possible.
Government Department funders
All government departments are anticipated to use a business case model for bids when funding research with public sector money. Though there are occasionally exceptions to this, for instance, this is less likely to be the case for health research, which is largely focused on quality-of-life analysis or highly focused/specialised grants around specific scientific innovations. Largely though the majority of bids for funding from government departments will most likely be in business case format of some form.
Large Scale Place-based funds
Large-scale place-based funds often require a business case to secure funding for a project. For instance, many universities won funding through the Levelling Up Fund when partnering on projects with local authorities. All these projects needed a full business case to be funded. Universities partners are often expected to contribute and help with the business case as a partner and therefore, it is important that those bidding understand the intricacies of developing such a business case.
Local policymakers
Local policymakers can also be funders as occasionally central government will give them some funding to fund projects in their geography. Often Combined Authorities, Growth Hubs, Local Enterprise Partnerships or Local Authorities, are given some funding, through which they may put out calls for local partners to place bids for innovative projects, usually within a particular theme. The majority of the time the bidding process will be the development of a business case.
Overall, any public funding no matter where it comes from will most likely have a bidding process based on the development of a business case. This is largely because all public funding has to be justified in front of HM Treasury and this is their chosen appraisal model. Whilst the bidding processes may not explicitly say ‘business case’ in the bid, or have the same terminology, the core elements of the business case will be within the bid. Consequently, it is highly important that academics looking to make an impact, understand how to build and create an effective business case.
Upcoming event: Join our journey to developing better civic business cases
As part of the National Civic Impact Accelerator programme, join City-REDI and the NCCPE in the webinar: An Introduction to Developing Business Cases for Civic Engagement Projects, on Friday 22 March 2024, 10:00 – 12:00 GMT.
Sign up via the Civic University Network website to register your place. Please note this is on a first-come, first-served basis.
This webinar will provide an overview of the Treasury Green Book’s Five Case Model and introduce you to how it can be used to develop effective business cases to fund your civic engagement work. This event is for anyone working in higher education who is developing, or looking to develop, bids and proposals to fund their civic work.
In the session, Rebecca Riley (City-REDI) will set the scene, and there will be opportunities for discussion and questions in breakout groups. There will also be an opportunity to hear from Joseph Lowe, Editor of the Green Book and Head of the Economics Branch at HM Treasury, who will provide an overview of the processes that go into developing a business case to deliver effective projects.
This blog was written by Alice Pugh, Policy and Data Analyst, University of Birmingham
Disclaimer:
The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI / WMREDI or the University of Birmingham.