As announced at Budget 2020, the government has undertaken a review of the Green Book, to ensure that investment spreads opportunity across the UK.
The Green Book is the government’s guidance on best-practice appraisal and is therefore a vital tool for ensuring value for money for taxpayers.
A central finding of the review is that the appraisal process often fails to properly consider how a proposal will deliver the government’s policy ambitions, including levelling up. This leads to appraisals being focused on a benefit cost ratio (BCR) that does not reflect social policy objectives or give ministers the information they need about where costs and benefits fall.
HM Treasury has therefore updated the Green Book to end the dominance of the BCR is decision making, starting with this Spending Review. Appraisals must give a comprehensive picture of cost and benefits, including non-monetisable, non-economic impacts.
In particular, options will be assessed first and foremost on whether they deliver relevant policy objectives (for instance, the regeneration of a particular place). Any option which fails to do so cannot be considered value for money and will not progress to shortlisting stage.
The government is also changing the guidance so it will no longer be acceptable for proposals to be ‘place blind’. Business cases should be developed to align with relevant local strategies and major interventions in the area. And for the first time, business cases for all proposals will have to set out how they will impact different places on a comply or explain basis.
These changes will be crucial to levelling up. They will mean that appraisals and advice to ministers should include much better analysis on how options deliver their policy goals, as well as which parts of the country look to gain most from them, supporting better-informed decisions.
These updates will feed into future Spending Reviews and HM Treasury will also roll out a tailored programme of training across Whitehall and beyond to ensure that the new Green Book guidance is embedded in future appraisals.