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The Green Book, published by HM Treasury in February (See link at bottom of the post), updates guidance for capital spending decisions across the UK. The new approach aims to ensure fairer investment in all regions, including urban, rural, and coastal areas beyond London and the South East.
It moves away from relying solely on benefit-cost ratios, requiring consideration of broader impacts when comparing projects. Benefit-cost ratios have tended to favour London and the Southeast as the due to the larger and more vibrant economy cases were easier to make.
This change supports more balanced public investment, such as new transport links, town centre regeneration, housing, and infrastructure, and aligns with the Government’s goal to promote nationwide growth. As the standard for appraising and evaluating public spending, the Green Book shapes how resources are allocated and which projects move forward.
A review in 2025 revealed that the previous Green Book was overly lengthy and complicated, the updated edition is now clearer, easier to use, and over 40% shorter than before. In addition an independent review of the social discount rate is underway, which could make long-term sustainable/green projects more financially attractive.
The Green Book also tightens up on certain aspects related to major schemes including, tighter rules on cost-overruns and risk assessment mean developers must provide more robust data on delivery timelines and cost certainty.
The new Green Book still recognises the importance of robust evidence and analysis, and metrics like benefit-cost ratios – but is clear these must not be used as a crude pass/fail test. Ministers will now see a more rounded assessment of a proposal’s impacts, rather than being guided by one headline number.
The new guidance has been developed hand-in-hand with devolved administrations, mayoral combined authorities and local councils, and supports the aim of this government to change the way the state makes decisions: promoting decision making that supports higher, more productive and more balanced growth across the whole of the United Kingdom.
For those who are currently bidding for or planning a project involving public land or funding – there is a need to rethink the pitch. It is not all about the monetisable benefits associated with the project, the strategic link to Local Plans and Social Value interventions becomes increasingly important.
As noted above getting schemes approved in the Southeast may get more difficult. However, well-constructed schemes within the context of a Spatial Development Strategy may be easier to fund e.g. Couple Town Centre Development with a Flood Alleviation Scheme.
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