Signature
RPSC = (PVB - PVC_nonpublic) / PVC_public
| Inputs | Definition | Unit |
|---|---|---|
PVB | Present value of monetisable social benefits of the option | currency in real terms, £ million in the examples |
PVC_nonpublic | Present value of the costs of the option not borne by the public sector, for example costs to patients and families | the same currency basis as PVB |
PVC_public | Present value of the public sector financial costs of the option | the same currency basis as PVB, above zero |
RPSC | Monetisable social benefits net of non-public costs per pound of public sector cost | ratio |
|---|
Function
Benefit-cost ratio comparison and classification function
Maps the present values of monetised benefits and costs of one or more options, split where needed by how consequences are classified and by who bears the costs, to ratio summaries and to their link with net present value. The basic ratio and net present value are given under cost-benefit analysis (HE-FM-CBA-002 and HE-FM-CBA-001); PVB and PVC on this page are the same quantities as PV_B and PV_C there. The formulas below relate the ratio to net present value, apply it between mutually exclusive options, and show how the classification of savings, transfers and costs outside the public sector changes it.
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Implementations
Excel
Return on public sector cost in one cell
With named cells PVBenefits, NonPublicCost and PublicCost, Excel returns the ratio, or #N/A when public sector costs are not above zero.
=IF(PublicCost>0,(PVBenefits-NonPublicCost)/PublicCost,NA())
Assumptions
Public sector budget as the constraint for the return on public sector cost
The ratio measures social value per pound of public spending, so it informs a choice among options that meet the same objective under a public sector budget constraint. It is reported alongside net present social value and the benefit-cost ratio, not in place of them.
Real present values for all three quantities
PVB, PVC_nonpublic and PVC_public are converted into real terms and present values on the same basis as the benefit-cost ratio of the same option.
Worked examples
Routine vaccination with part of its cost borne by families
Illustratively, if £1.0 million of the £4.0 million cost of option X fell on families and £3.0 million on the public sector, its return on public sector cost would be about 2.33, against a benefit-cost ratio of 2.0.
PVB = 8.0; PVC_nonpublic = 1.0; PVC_public = 3.0; RPSC = 2.33
Routine vaccination with every cost on the public sector
When every cost of option X falls on the public sector and its public financial costs equal its social costs, the return on public sector cost equals the benefit-cost ratio of 2.0.
PVB = 8.0; PVC_nonpublic = 0; PVC_public = 4.0; RPSC = 2.0
Common errors
Ranking by the benefit-cost ratio when only public money is constrained
When part of the cost of an option falls outside the public sector, the benefit-cost ratio divides by costs that the budget does not pay. In the illustrative split above, option X returns about 2.33 per pound of public cost but 2.0 per pound of total cost, so ranking by the benefit-cost ratio understates its return to the budget.
Comparing returns on public sector cost across different objectives
The Green Book restricts summary metrics of social value, including this ratio, to options that meet the same objectives. A higher return does not show that a proposal is better than another proposal serving a different objective.
Sources
Green Book definition of the return on public sector cost
HM Treasury. The Green Book (2026): UK government guidance on appraisal. Updated 5 February 2026. Chapter 6, paragraph 6.93 and Table 10 (Summary metrics of social value), which define PVB, PVC_public and PVC_non-public and give the return on public sector cost as PVB less PVC_non-public divided by PVC_public; paragraph 6.100 limits summary metrics to options meeting the same objectives.
Canonical Identity
Stable URI · Machine-readable · Resolvable · CC BY 4.0