This month, HM Treasury released an updated version of the Green Book following the 2025 Green Book review. The 2025 Green Book review consulted a wide range of organisations and individuals, including combined authorities, local authorities, central government departments and arms-length bodies, devolved governments, think tanks, consultancies and academics, including researchers from within the LPIP Hub.
The review highlighted some key findings from experts as to what users would need from an updated Green Book. The main findings included:
Insufficient emphasis on place-based objectives
Stakeholders often feel they have limited ability reflect regional equality objectives in Green Book business cases. By design, the guidance encourages people to ask, “What is the best way to deliver this project?” rather than “What is the right project to improve growth in this area?” With stakeholders concluding, therefore, that the guidance process urges practitioners to focus on the management of a project, as opposed to choosing the right project to incentivise growth.
Secondly, stakeholders often struggle to evidence the strategic system-wide benefits of projects in place. By its nature, the purpose of the business case is to assess the impact of an individual project, preventing the capture of interactions between complementary, mutually reinforcing place-based projects.
Place-based business cases
Central government funding processes often force cross-place competition, alongside comparing proposals to national objectives rather than being aligned with each place’s needs. In addition to this, as stated above, projects are developed in silos within a business case, preventing appraisals from considering the strategic and economic interactions between multiple interventions in place.
Ineffectiveness in assessing transformational change
Stakeholders valued the Green Book for assessing marginal impacts; however, they found it ill-suited to appraising transformational place-based interventions. With practitioners facing difficulties in evidencing wider economic benefits, such as labour productivity and business investment, the Green Book lacks clarity about the consideration and evidencing of these impacts in a compelling manner. With further challenges around the lack of direction in relation to the economic preconditions needed for transformation in place.
Continued overemphasis on Benefit-Cost Ratios (BCRs) in decision-making
Value for money assessments using the Green Book business case methodology support practitioners in making a balanced judgement on the optimal use of public resources to meet objectives. This involves considering monetised social benefits and costs, expressed in monetary terms and summarised via a benefit-cost ratio. However, practitioners continue to highlight issues with the overemphasis on the value-for-money element in decision-making. Firstly, stakeholders highlight that the rigid benefit-cost ratio threshold (e.g. 2.0), which turns the ratio into a target that practitioners feel they must meet to secure funding. Secondly, there is the undervaluing of the non-monetisable benefits; the impacts of some projects are difficult to monetise. Overall, this skews effort towards monetising benefits to clear the bar, at the expense of rounded appraisal and disadvantages projects whose substantial benefits are difficult to quantify.
BCRs and regional bias
Many practitioners claimed that the overemphasis on the benefit-cost ratio directly introduces regional bias into decision-making. Stakeholders contend that benefit-cost ratios are higher in London and the South East than elsewhere in the UK, due to factors such as higher land values. Though there is no conclusive evidence that the Green Book methodology is biased towards London and the South East, or that these two regions systematically produce larger benefit-cost ratio values than elsewhere in the UK.
However, poor transparency around government business cases makes it difficult to demonstrate that BCRs are not biased towards London and the South East, and that, should these biases exist, they do not materially impact government spending decisions.
Overly long and complicated guidance
Many practitioners feel the Green Book and accompanying supplementary guidance are too long and complex. The 2022 Green Book guidance was 148 pages long, and there are thousands of pages of accompanying supplementary guidance. Officers in place noted that, typically, there is neither the available resource nor the expertise to accurately follow all pages of guidance.
Inadequate capacity and capability across the public sector
Local and regional place-based officers highlighted that they have limited capacity and capability to develop and review business cases. It was highlighted that there was a particular shortage of economists and analysts. A previous survey found that in 2018, only 18% of local authorities reported that they had a dedicated data and analytics team. This has resulted in an over-reliance on consultants to support technical aspects of appraisal processes, with 80% of local authorities reporting that they had used external resources to undertake their transport modelling and economic appraisal work.
Poor transparency of government business cases
As stated, poor transparency makes it difficult to determine whether benefit-cost ratios are systematically biased towards London and the South East, and whether any such bias materially skews government spending decisions. Compounding this, central government publishes few business cases, resulting in those outside of central government having little visibility of the options appraised or the rationale for judging one option as a better value for money than another.
Main updates to the Green Book
As a result, the Treasury has made significant updates to the Green Book. The main updates that have been integrated into the updated 2026 Green Book include:
1- Greater clarity on value for money assessments
Treasury has more clearly emphasised that government spending decisions should not be made based on which project business case has generated the highest benefit-cost ratio. Projects should be considered as a whole within the context in which they exist, which includes not just the consideration of monetisable benefits and costs, but the unmonetisable benefits and costs, risks and uncertainties, public sector costs and distribution effects.
2 – Streamlined Guidance
The new Green Book guidance is around 40% shorter than the previous version, down to 88 pages. Following findings from the review that the Green Book and supplementary guidance were too lengthy and complex for local and regional officers with limited capacity and capability, the Treasury decided to streamline the Green Book itself. This streamlined version of the Green Book, supported by the more technical supplementary guidance, should make the Green Book easier to understand and navigate.
3 – Greater Transparency
Following the findings around the lack of transparency in the 2025 Green Book review, alongside the updated Green Book, the Treasury has released a business case directory to demonstrate good practice for Green Book users. This directory has a collection of project and programme business cases; the business cases have to be uploaded to the directory within four months of Treasury approving them.
4 – Transformational change
The updated Green Book provides a clear definition of transformational change. Emphasising that transformational change is rarely achieved by individual projects and programmes, but instead is achieved through a portfolio of projects and programmes that are collectively focused on achieving transformational objectives. The strategic case should demonstrate how individual projects or programmes align with wider aims to achieve transformational change. If an individual project or programme is anticipated to bring about transformational change, then practitioners must transparently explain assumptions and support them with evidence and analysis.
5 – Embedding evaluation
Greater importance has been stressed as to the value of monitoring and evaluation, unifying the Green and Magenta Books. Stressing the importance of drawing upon previous evaluation evidence to inform appraisals of new interventions. With this in mind, practitioners should be considering how the intervention will be monitored and evaluated, in the production of the business case, considering what resources will be required for this.
6 – Place-focused
Central Government is proposing to add ‘place-based business cases’ to the Green Book 2026 and the 2025 Green Book review. This extension aims to resolve challenges around comparing business cases across places with differing needs and national priorities, which may not be aligned with the needs of place.
Place-based business cases will be portfolio-level business cases developed in partnership between sub-national institutions and central government departments. To enable the gathering of different projects required to achieve the objectives of a particular place, allowing central government to robustly assess the complementarities between different projects. With pilot areas announced in October.
7 – Competitive vs allocative funding
The challenges of competitively allocated funding, which often lead to several issues, including uncertainty, capacity, capability and high business case development costs, were highlighted in more detail in the updated version of the business case. With the Green Book now demonstrating that all the benefits and costs of competitive based funded need to be considered before deciding the best route forward. If competitive funding is determined as the best option, then the Green Book has set out a design process for central government officers in the design of said fund. This should lead to funds from central government being designed in a more comprehensive manner that provides greater support for regional officers in their application to these funds.
Conclusion
The changes to the Green Book should tackle many of the challenges highlighted in the Green Book review. Especially given the wider practical policy, guidance and documentation, such as the place-based business cases and the business case directory, that have been produced alongside the updated Green Book. The updated Green Book has heightened the emphasis on the importance of the business case rather than the value for money alone. Furthermore, this provides greater transparency around government decision-making through the publication of Treasury-approved business cases.
Further to this, the streamlined guidance should support officers in place who usually have limited capacity and capability to gain a full understanding of the appraisal guidance. Supported by the future development of place-based business cases, which should enable the demonstration of synergies between projects and programmes in a portfolio format, this may also support the demonstration of transformational change.
So far, the changes in this Green Book have been welcomed by place-based leaders across the UK. Mayor of the Liverpool City Region, Steve Rotheram, said:
“The new Green Book is a massive step towards fairness. It means our ideas and ambitions will finally get a fair assessment and that places like the Liverpool City Region will start to see the investment and opportunity they’ve long been denied.”
Tracey Brabin, Mayor of West Yorkshire, stated:
“Having a simpler and more accessible Green Book will help to drive investment and open opportunity across the country.”
Mayor of the West Midlands, Richard Parker, said:
“For regions like the West Midlands, it means decisions can be based on what works locally – creating jobs, fixing transport, investing in infrastructure and supporting skills.”
Overall, the updates Green Book has set high expectations for improvements in the design of funds, transparency in funding decisions, greater clarity on value for money assessments and greater focus on place. Now we will have to wait for the practical application of the updated guidance, alongside the roll-out of the new place-based business case policy and utilisation of the business case directory tool, to determine the success of the updated Green Book.
This blog was written by Alice Pugh, Senior Economic Analyst – City REDI, University of Birmingham.
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Disclaimer:
The views expressed in this post are those of the author and not necessarily those of City-REDI or the University of Birmingham.