Table of contents

Approximate read time: 6 minutes

1. What does the green book do?

The green book sets out the government’s guidance on appraisal—the process of assessing the costs, benefits and risks of different options to achieve government objectives.[1] The green book does not set the government’s objectives. Neither does it make decisions on behalf of ministers. Instead, the green book “provides a framework for assessing the value for money of alternative proposals for meeting those objectives, and it supports officials to provide impartial and objective advice to ministers”.[2]

2. 2025 review of the green book

In January 2025, the chancellor of the exchequer, Rachel Reeves, announced a review of the green book and how it was being used to provide objective and transparent advice on public investment across the UK.[3]

The review was prompted by the contention among some local and regional authorities, as well as other commentators, that HM Treasury had made insufficient progress in improving appraisal across government. These stakeholders argued that the green book was continuing to impede public investment in areas outside of London and the south-east of England.[4] This was despite a previous review of, and subsequent reforms to, the green book guidance in 2020 to try and ensure “government investment spreads opportunity across the UK”.[5]

Other concerns around the current green book identified in the 2025 review included:

  • insufficient emphasis on place-based objectives—objectives designed to inform the strategy and analysis for a set of proposals in a particular place
  • the perceived ineffectiveness of the guidance at assessing transformational changes that arise from major investments in a particular area
  • continued over-emphasis on benefit-cost ratios (BCRs) in decision-making, so placing too little weight on non-monetisable benefits and costs which cannot be included in a BCR
  • overly long and complicated guidance, with the green book itself 148 pages long and supplementary guidance on a variety of appraisal topics running into thousands of pages
  • inadequate capacity and capability across the public sector, with local and regional government having relatively few staff involved with developing and reviewing business cases
  • poor transparency of government business cases, making it difficult for those outside government to understand the options considered in the appraisal process, and why decision makers deemed one option to be better value for money than others

3. How will the updated green book change?

According to HM Treasury, an updated green book will be published at the start of 2026.[6] The updated guidance will reflect six actions designed to address the issues raised in the review. These include:[7]

  • place-based business cases: HM Treasury will work with relevant departments, 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.
  • assessing transformational change: HM Treasury will improve the green book guidance on appraising transformational change and commission an independent review of the green book discount rate (the interest rate used to calculate the present value of future cash flows or liabilities arising from investment projects) to make sure that the government is taking a fair view of the long-term benefits that arise from transformational investments.
  • use of BCRs: HM Treasury will update the green book to provide greater clarity on the role of the BCR in appraisal. It will make clear that the green book does not endorse the use of arbitrary ‘BCR thresholds’, which stipulate that a project can only receive funding if it has a BCR above a certain value.
  • simplifying and shortening the green book, as well as HM Treasury providing more clarity on the level of detail that is proportionate for business cases of different levels of cost and complexity.
  • improving training and accreditation in the green book and its associated business case guidance.
  • publication of business cases for major government projects and programmes, to improve transparency of decision making and help to support local and regional government by demonstrating best practice.

4. How do the green book reforms link to the spending review?

HM Treasury published the findings of its review into the green book alongside the June 2025 spending review, which set out the government’s public spending plans over the next few years. According to the government, the green book reforms will contribute to ensuring that the benefits of spending on public sector investment outlined in the spending review “are felt across all nations and regions of the United Kingdom”.[8]

The 2025 spending review allocated the additional spending on public sector investment announced in the 2024 autumn budget and 2025 spring statement. Those fiscal events saw the government increase the envelope for public sector capital spending by £120bn for the period 2025/26 to 2029/30 compared with the plans set out by the previous Conservative government at the 2024 spring budget.[9]

5. Read more

Cover image from Freepik.

References

  1. HM Treasury, ‘Green book review 2025: Findings and actions’, 11 June 2025, p 12. Return to text
  2. As above, p 6. Return to text
  3. HM Treasury, ‘Chancellor vows to go further and faster to kickstart economic growth’, 29 January 2025. Return to text
  4. HM Treasury, ‘Green book review 2025: Findings and actions’,11 June 2025, p 12. Return to text
  5. HM Treasury, ‘Final Report of the 2020 green book review’, 25 November 2020, CP 331, p 2. Return to text
  6. HM Treasury, ‘Green book review 2025: Findings and actions’,11 June 2025, p 23. Return to text
  7. As above, pp 14–25. Return to text
  8. HM Treasury, ‘Spending Review 2025’, 11 June 2025. Return to text
  9. As above. Return to text