In January 2025, HM Treasury launched a review of the Green Book, the UK’s guiding framework for public-sector appraisal of costs, benefits and risks of policies and projects. The focus was on whether the Green Book supports strategic, place-based, transformational investment – across all parts of the country – and if it adequately accounts for long-term, non-monetised gains.
An updated version of the Green Book will be published in early 2026, with a progress report on implementation expected in June 2026. This marks a significant potential shift in how public value is assessed across government. The question is how far will any changes go?
The Green Book offers a unified framework for evaluating the socio-economic impact of public spending in the UK. It outlines the values that we hold as a society and the methods for assessing those impacts. As a result, the Green Book directly influences how our collective resources are allocated, what projects and policies are undertaken, and where infrastructure is located.
The 2025 Green Book Review outlines six areas of change designed to improve the clarity, consistency, and effectiveness of public sector investment appraisals. The focus is on ensuring guidance better supports place-based priorities, accounts for transformational impacts, and is applied in a way that is proportionate to the scale and complexity of the project.
We've summarised the six key areas of reform below, as well as with the potential implications for public authorities.
The review identifies a critical gap in how public investments are currently appraised: many projects are evaluated individually, ignoring how interdependent initiatives have the potential to collectively deliver greater value for a particular place. The Treasury now plans to introduce place-based business cases that bring together projects – such as housing, transport, and skills – into a single, strategic investment proposal. This approach aligns with OECD recommendations for policies that are spatially targeted and built on local priorities.
The potential benefit is clear: better alignment of local growth plans, more coherent investment delivery, and a strong foundation for levelling up.
However, one challenge in place-based appraisal is the reliance on land value uplift – often measured through house price increases – as a proxy for economic benefit. This can bias results towards regions like London and the Southeast, where property values are already high, potentially disadvantaging areas with lower baseline land values.
This can make it harder to make a case for investment in places that need it most, especially as some projects may never show a positive return in terms of a monetary benefit-cost ratio (BCR). But this doesn’t necessarily mean they’re the wrong projects. In these cases, the appraisal should focus more on the market failure and the rationale for intervention, distributional impacts and local economy impacts. These projects might bring material societal benefits, even if those benefits are difficult to measure.
Transformational investments – projects that create structural shifts in local economies – are often under-appraised due to their long-time horizons and uncertain outcomes. To address this, the Treasury says it will improve guidance for appraising such projects, and commission an independent review of the Green Book discount rate to ensure long-term benefits are not overly discounted.
The discount rate reflects how future costs and benefits are valued today; it reflects the principle that society prefers to realise value sooner rather than later. The current rate in the Green Book is 3.5% per annum for the first 30 years, with reduced rates thereafter (3% for years 31-75, then 2.5%). This approach may undervalue both future benefits and future costs. For example, it may reduce the emphasis placed on long-term productivity gains, climate resilience, public health improvements, and future costs, including long-term environmental impacts such as carbon emissions or biodiversity loss.
Lower discount rates for projects with impacts beyond 30 years – especially relevant for environmental projects involving long-term biodiversity or carbon impacts – support the use of sensitivity analysis and supplementary approaches like natural capital valuation, to better reflect intergenerational considerations. This change opens the door for greater support for innovation-led growth, net-zero infrastructure, and regeneration schemes that may have high strategic value but low short-term returns. The trade-off, however, lies in complexity: transformational impacts can be inherently difficult to forecast. Local bodies may require scenario modelling, systems thinking, and interdisciplinary expertise – approaches not yet common in many local authorities.
The review reaffirms that while the BCR remains an important tool for project appraisal, it should not dominate decision making at the expense of other relevant factors. A case in point is the Jubilee Line Extension in London, which was initially sanctioned with a BCR of 0.95, indicating that projected costs slightly exceeded anticipated benefits. Nonetheless, the project was pursued based on the expectation of substantial, albeit challenging to quantify, wider economic advantages, particularly in the Docklands area. Broader benefits, which included stimulating economic transformation and enhancing property values, were not fully reflected in the initial BCR calculation. The Treasury will update the Green Book to provide greater clarity on the role of the BCR, explicitly stating that the guidance doesn't endorse arbitrary thresholds and that a BCR below 1 does not automatically imply poor value for money.
Greater clarity in this regard could encourage decision makers to interpret BCRs as part of the wider strategic context, recognising that different projects pursue different objectives and that strategic alignment, distributional impact, and non-monetised benefits also matter. However, this more flexible approach may invite more subjectivity and challenges around consistency. Authorities will need to ensure robust documentation and decision-making frameworks are in place to demonstrate why a project represents value, regardless of the level of the BCR.
The review acknowledges that the Green Book has grown into a dense and difficult document to navigate, particularly for smaller projects or authorities with limited resources. The Treasury will seek to simplify and modularise the guidance. This new format will be clearer, shorter, and tailored to project size and complexity, with examples of appropriate techniques and proportionality thresholds.
The expected upside is a more efficient and user-friendly appraisal process that encourages wider participation, especially from under-resourced councils. A revised guidance which makes appraisal more accessible for officers is welcome – Green Book compliant business cases shouldn’t always require external consultant support.
During the transition period, however, it may require time and support to embed new approaches consistently across departments and local authorities. Teams will need upskilling to confidently apply the new structure and avoid either over-simplifying complex projects or over-engineering small ones.
The review acknowledges a fundamental imbalance: many local and regional authorities have relatively few resources and often lack the technical expertise and capacity to develop business cases. To close this gap, the Treasury and the Welsh Government will reform the Better Business Cases training programme, expand early-stage development support, and promote secondments between local and central government.
If delivered at scale, this has the potential to level the playing field, ensuring smaller or less affluent areas have a fairer chance of accessing funding. The main constraint will be delivery. Local bodies must have the capacity to release staff for training and to retain skilled analysts in competitive markets. A robust long-term professional development pipeline will be essential, to train officers to conduct Green Book compliant appraisal, as well as wider economic theory about market failures and the economic principles that support public intervention. In turn, this could help local authorities to better understand how they can get the best out of technical advisers.
To improve accountability and promote shared learning, the Treasury will begin publishing full and summary business cases for major projects shortly after approval. These will include information on geographic distribution and key decision factors, creating new opportunities for benchmarking and policy learning across the public sector.
This is a welcome step towards openness and consistency. Published cases will serve as live reference points for new proposals, particularly useful for smaller authorities navigating the business case process. To make this transparency genuinely impactful, however, it should be accompanied by practical tools: useable templates, guidance around the calculation of specific benefits, and access to the wider resources. Departments must also prepare for such a transparency shift: protocols will be needed to balance clarity with commercial confidentiality, and to avoid reputational risks stemming from misinterpretation or oversimplification.
Though these changes are promising in principle, it's still early days. Whether they will meaningfully embed broader economic outcomes – such as wellbeing, inclusion, and environmental sustainability – into appraisal in a consistent and practical way is yet to be seen. Crucially, we’ll need to see if they help prioritise interventions that make the greatest impact where disparities are most pronounced. A new revision should also go further to giving greater focus on carbon and biodiversity in all projects.
If the new Green Book can deliver on these ambitions, it could be a huge boost for areas of the UK that need investment the most – and help to better align public spending with long-term societal value.
Next steps in the review process:
Whether you're developing an investment case, navigating long-term transformational impacts, or need to ensure your proposals meet evolving Treasury standards, support is available to help you build Green Book compliant business cases that can stand up to scrutiny.
For more insight and guidance on this, get in touch with our Joel Strange, Rob Turner or Nicola Mousley.
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