Councils are being asked to justify more with less. A three-year finance settlement has brought some planning certainty, the reorganisation programme is under review, and transformation and capital bids are competing for limited money.
In that climate, a business case that cannot survive scrutiny loses more than a funding decision. It loses time, credibility and, sometimes, the confidence of Members.
This matters more than it used to. Auditors, Members and government departments all expect a clear line from the evidence to the recommendation, and they are quicker to spot a case that has been written backwards from the answer.
The five cases, and where each usually fails
The five-case model in HM Treasury's Green Book is widely used across the UK public sector, and for good reason: it forces a proposal to answer five different questions.
| Case | The question it answers | Where it usually fails |
|---|---|---|
| Strategic | Is there a clear need, and does the proposal fit the organisation's priorities? | The problem is described in general terms and the objectives cannot be measured |
| Economic | Does it offer the best value among realistic options? | The options list is a shortlist of one |
| Commercial | Can it be procured and delivered? | Market assumptions are untested |
| Financial | Is it affordable? | Costs are shown, but not set against the medium term financial strategy |
| Management | Can the organisation deliver it? | Benefits have no owner and no tracking |
SOC, OBC and FBC: what changes at each stage
Business cases are normally built in stages, with the evidence becoming firmer at each one.
| Stage | Purpose | Evidence expected |
|---|---|---|
| Strategic outline case (SOC) | Confirms the case for change and a shortlist of options | Strategic fit, long list of options, indicative costs |
| Outline business case (OBC) | Identifies the preferred option and tests affordability | Options appraisal, costed benefits, risks, delivery approach |
| Full business case (FBC) | Confirms the deal before commitment | Procurement outcome, final costs, delivery plan, benefits tracking |
Effort should be proportionate. A small internal change does not need a full five-case document, but it still needs the five questions answered.
Seven reasons business cases fail scrutiny
- Optimism bias. Costs are underestimated and benefits overstated. The Green Book expects an explicit allowance for it.
- No genuine "do nothing" baseline. Without a fair comparison, savings are hard to prove.
- A thin options appraisal. A preferred option placed beside two straw men fails quickly.
- Benefits with no owner. If nobody is accountable for a saving, it will not appear in the accounts.
- Savings not tested against the MTFS. A proposal that looks affordable on its own may not be once other pressures are counted. Getting this right is what our business case development work is built around.
- Risks listed but not quantified. A risk register is not a risk assessment. Reviewers want to see the cost and likelihood of what could go wrong.
- No management case. Delivery plans, governance and benefits tracking are added at the end, or missing altogether.
What a good business case looks like
The best ones share a few habits. They open with a one-page summary in plain English that a Member can read in five minutes. They show their working, so a reviewer can follow every number back to its source. They compare options fairly, including doing nothing. And they say clearly what is uncertain, rather than hoping nobody notices.
They also get an independent read before submission. A fresh pair of eyes will find the gaps far more cheaply than a scrutiny panel will.
The questions a scrutiny panel will ask
Whether the audience is a Cabinet, an audit committee or a government department, the questions are remarkably consistent:
- What happens if we do nothing?
- Why this option and not another?
- How confident are we in the cost?
- Who is accountable for delivering the benefits?
- What could stop it working, and what would that cost?
A business case that answers these five questions plainly, and with evidence, has already cleared most of the hurdles.
How independent challenge helps
The author of a business case is rarely the best person to test it. Independent challenge, whether from a peer review or an external adviser, looks for the weak assumptions, the missing evidence and the numbers that do not reconcile, before a panel does. It is quicker and cheaper to fix a case at draft stage than after it has been rejected.
A pre-flight checklist before Cabinet or Council
Before a report goes to Members, a Section 151 officer can run through eight questions:
- Is the problem defined in measurable terms?
- Is there a fair "do nothing" baseline?
- Were at least three realistic options assessed?
- Has optimism bias been allowed for?
- Is every benefit owned and dated?
- Does the financial case reconcile to the medium term financial strategy and the reserves position?
- Are the main risks costed?
- Is there a delivery plan with named responsibilities and a route for tracking benefits?
If any answer is "no", the business case is not ready.
Making it stick
None of this is complicated. What makes it hard is doing it under time pressure, with a finance team that is already stretched. The councils that get good decisions are usually the ones that invest early in the thinking, test the numbers independently, and treat the business case as a working document rather than a hurdle. A rejected case wastes the time of everyone who worked on it, and delays the outcome the council was trying to reach in the first place.
| Preparing your next submission? Nonsuch Finance helps public sector bodies develop business cases, from outline to full, that stand up to Member, audit and government scrutiny. Get in touch via the author bio below. |
About the author
Enver Enver is the Founder and Managing Director of Nonsuch Finance, a public sector financial and management consultancy. A former Chief Finance Officer at the Greater London Authority, he has over 30 years' senior experience in public sector finance across the GLA, Cabinet Office, Home Office, local government and NHS trusts.
Frequently Asked Questions
What is the five-case model in business proposals?
The five-case model is a framework used in the UK public sector to assess business proposals. It requires addressing strategic, economic, commercial, financial, and management questions to ensure a comprehensive evaluation. This model helps prevent common pitfalls and ensures clear justification for funding requests.
Why do business cases often fail scrutiny?
Business cases can fail scrutiny due to factors like optimism bias, inadequate options appraisal, and lack of accountability for benefits. Other issues include not providing a 'do nothing' baseline for comparison and failing to quantify risks effectively. Addressing these concerns is crucial for a successful proposal.
What should be included in a good business case?
A good business case should begin with a concise, one-page summary and include a detailed explanation of the evidence supporting the proposal. It should fairly compare options, acknowledge uncertainties, and clearly outline who is accountable for delivering benefits. Independent reviews can also enhance its quality.
How can independent challenge improve a business case?
Independent challenge provides an objective perspective on a business case, identifying weak assumptions and missing evidence before submission. This process can highlight discrepancies and areas for improvement more efficiently than a scrutiny panel, ultimately saving time and resources.
What questions should be addressed before submitting a business case?
Before submission, ensure that the problem is measurable, a 'do nothing' baseline is considered, and at least three options are assessed. Additionally, check for optimism bias, ownership and tracking of benefits, and a solid delivery plan. If any crucial aspect is missing, the business case may not be ready for approval.
How does the financial strategy impact business case approvals?
The financial strategy is critical because it ensures that the proposed costs align with the medium-term financial strategy (MTFS) and reserves. If a proposal appears affordable in isolation but does not fit within broader financial constraints, it risks rejection from decision-makers.
What role does a Section 151 officer play in reviewing business cases?
The Section 151 officer is responsible for ensuring that the financial aspects of a business case are sound and that it complies with legal and regulatory requirements. They can conduct a pre-submission checklist to verify whether key criteria are met, helping to safeguard against potential issues before the case goes for approval.
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