13 June 2025The Treasury has concluded a review of the Green Book, used to provide a framework for assessing the value for money of alternative proposals for meeting government objectives. This includes proposals for capital projects affecting local councils amongst others. The review, which has found no structural regional bias in these assessments, has nonetheless identified six findings which will result in changes to the methodology:
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Finding
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Action |
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1. Insufficient emphasis on place-based objectives
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HM Treasury will work with relevant departments, including the Ministry of Housing, Communities and Local Government (MHCLG) and the Department for Transport (DfT), as well as local and regional government, to introduce place-based business cases. These will bring together the different projects that are needed to achieve the objectives of a particular place. Place-based business cases will make sure that the government properly assesses the complementarities between different projects, such as housing and transport.
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2. Ineffectiveness at assessing transformational change
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HM Treasury will improve the Green Book guidance on appraising transformational change. HM Treasury will commission an independent review of the Green Book discount rate to make sure that the government is taking a fair view of the long-term benefits that arise from transformational investments.
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3. Continued over-emphasis on BCRs in decision making
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HM Treasury will update the Green Book to provide greater clarity on the role of the Benefit Cost Ratio (BCR) in appraisal. It will make clear that the Green Book does not endorse the use of arbitrary ‘BCR thresholds’. It will outline that a BCR of less than one does not automatically constitute poor value for money. HM Treasury does not simply rank different projects, with different objectives, by their BCRs as a means of allocating funding.
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4. Overly long and complicated guidance
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HM Treasury will radically simplify and shorten the Green Book and the accompanying business case guides, publishing an updated Green Book at the start of 2026. HM Treasury will make clear the level of detail that is proportionate for business cases of different levels of cost and complexity and will publish examples of core appraisal techniques.
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5. Inadequate capacity and capability across the public sector
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HM Treasury and the Welsh Government will reform the Better Business Cases training programme. The National Wealth Fund is expanding its role to provide early-stage development support to local and regional government. HM Treasury will support MHCLG and other nine departments to establish more secondments between central and regional government.
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6. Poor transparency of government business cases
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The government will publish business cases for major projects and programmes. This will ensure transparency of decision making, including the geographical distribution of projects, and help to support local and regional government by demonstrating best practice.
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Read more here.
