On 24 September, the Local Policy Innovation Partnership (LPIP) Hub and the Yorkshire Policy Innovation Partnership (YPIP) attended the Yorkshire and Humber Climate Change Commission Annual Convention to present on developing business cases for environmental and climate change projects. The presenters at the event included:
Professor Andrew Brown – Discussed his experience of developing a business case for a Green and Blue Infrastructure project. He emphasised the challenges facing those developing business cases in terms of developing strong economic and strategic cases.
Alice Pugh – Outlined the structure of the business case before going on to discuss the challenges of developing a robust economic case for environmental and climate change projects, focused on a climate change project which successfully secured funding through levelling up.
Lisa Dowling (Healthy Urban Places, Born in Bradford) – Presented on measuring the health and environmental impact of the Bradford Clean Air Zone (CAZ). Introducing the Bradford New Station (Southern Gateway) and how similar benefits could be generated through this intervention, but the difficulties in finding robust long-term evidence that could effectively demonstrate these impacts.
Tom Burton – Introduced the Green Book, discussing the influence of the Green Book on the development of business cases and how the Green Book 2025 review may impact how business cases are conducted in the future.
Our presentations raised many questions amongst attendees around the use of the Green Book Business Case Model; this blog demonstrates our response to a few of those key questions:
Why are climate change and environmental projects difficult to measure in the economic case?
The benefits of potential environmental and climate change are challenging to measure due to a lack of evidence. For instance, the first guidance for the appraisal of transport projects goes back to 1978, with the most up-to-date Transport Appraisal Guidance (TAG) being released in 2025 by the Department for Transport (DfT. That means for transport interventions, evidence has been developed for 47 years.
In comparison, the earliest guidance around appraising climate change projects only dates back as far as 2014. There is, therefore, a lack of robust evidence around the appraisal of environmental and climate change projects. This has been compounded by austerity, which led to reductions in capacity amongst public sector bodies to conduct robust evaluations of interventions, further limiting the evidence around measuring the impact of environmental and climate change projects.
However, in recent years, government departments have been working to improve the guidance around the appraisal of environmental and climate change projects. The most up-to-date guidance includes:
- Green Book supplementary guidance: valuation of energy use and greenhouse gas emissions for appraisal
- Green Book supplementary guidance: climate change and environmental valuation
- Green Book Supplementary Document: Environmental discount rate review, conclusion
- Valuing the benefits of blue-green infrastructure
- Flood and Coastal Erosion Risk Management (FCERM) appraisal guidance
- Air quality appraisal: damage cost guidance
Why is there a lack of skills at a sub-national level to develop business cases?
There are several contributing factors to a lack of skills at a sub-national level. There has been a steady decline in capacity and capability to develop business cases over several years at a place level. A main contributor to this has been austerity. Local Authorities have been significantly impacted by austerity, with councils across England seeing, on average, a 26% decline in spending power between 2010/11 and 2020/21. This has reduced capacity and capability within local authorities and has particularly impacted staffing in service areas, such as economic development, which do not deliver the statutory duties that local authorities are legally required to deliver. As a result, economic development services, which often support the development of business cases, within local authorities vary geographically, by skills and expertise and by the scope of their role. This has resulted in reduced capacity and capabilities in the ability to develop business cases at this level.
In addition to this, it can often cost local and combined authorities tens of thousands of pounds to adequately train staff to develop business cases. This is a risk for many local and combined authorities, particularly when, in recent years, many of the funds released by the government have often been competitive funding streams, which means that there is no guarantee that a local or combined authority will secure funding when submitting a business case bid for these funds. As a result, many local and combined authorities have been opting for external support rather than training their own staff to develop business cases.
The issue of a lack of capability at a sub-national level was found within the Green Book 2025 review. To resolve this, HM Treasury will be seeking to reform the Better Business Case training programme to ensure it is as valuable as possible for local and regional government.
Will the introduction of place-based business cases make it easier to develop environmental and climate change business cases at a local and regional level?
In the 2025 Green Book review, HM Treasury outlined that the HM Treasury will work together with the Ministry for Housing, Communities and Local Government (MHCLG) and DfT to develop ‘place-based business cases’ which will set out the strategy and analysis for a set of proposals in a particular place. The function of these business cases will be to act as a portfolio business case sitting above individual project and programme business cases for specific interventions. The purpose of the ‘place-based business case’ will be to underpin the strategic case for a set of underlying intervention business cases. It will set out the overall objectives for a place against which underlying intervention business cases will be appraised. This should improve the focus on place across business cases from these departments, as well as improve the ability to consider the strategic and economic interactions between multiple projects in place. Whilst enabling the ability to mutually agree on objectives between central and regional/local governance institutions, bridging the gap between the needs of central government and local places.
Whilst this is not necessarily aimed at promoting climate change or environmental action, it does offer an opportunity to local and combined authorities. If local and combined authorities were to build in climate change and environmental action into their ‘place-based business case’ strategy and objectives, then this would enable them to develop climate change and environmental interventions which meet these priorities.
In addition, the benefits of different projects and programmes are often intertwined and mutually reinforcing. However, historically, many funds have often been aimed at funding a singular project or programme, with high levels of specification, usually aimed at meeting central government objectives. In theory, the ‘place-based business case’ will enable the consideration of the strategic and economic interactions between multiple interventions in place, as it will bring together the different projects required to achieve objectives set out in the ‘place-based business case’. For example, if a local authority has an objective within their ‘place-based business case’ to reduce greenhouse gas emissions within a place. A subsequent appraisal might demonstrate that the best way to achieve this would be through two projects, one aimed at retrofitting local council housing stock and a second aimed at improving access to public and active transport infrastructure. This appraisal would then provide a stronger foundation for the two project business cases. Therefore, the benefits of a ‘place-based business case’ will be that it will provide a more robust foundation for a strategic and economic case of place-based projects, allowing for the consideration of the interaction of multiple interventions to meet place-based objectives.
At the LPIP Hub, our work continues on the development of a programme of work aimed at providing guidance and support on the development of business cases for place-based projects. If you have any queries regarding business cases, please contact the LPIP Hub for support.
This blog was written by Alice Pugh, Policy and Data Analyst, City-REDI, University of Birmingham.
Find out more about the Local Policy Innovation Partnership Hub.
Disclaimer:
The views expressed in this analysis post are those of the author and not necessarily those of City-REDI or the University of Birmingham.