Professor Rebecca Riley looks at the UK Treasury’s Green Book guidance, arguing that while it’s a valuable decision-making tool, it’s often misused or misunderstood, leading to poor public investment outcomes and calling for better training and cultural change.
It’s been an interesting few weeks in Green Book land following the report on the Treasury’s review. This obscure technical guidance has a huge effect on our world, but knowledge about the guidance is often left to a small number in an organisation (or consultants). That is the biggest issue with the guidance.
There is a mythology built up around it, creating a classic information failure in public service design. This information failure leads to the guidance becoming a tick box process rather than a toolbox to design better solutions.
I developed my Green Book skills as part of the widespread training everyone in Regional Development Agency took part in. I’ve referred to it as “sheep dip” much to many people’s amusement. But everyone having a general shared understanding of the basics cannot be underestimated.
Instead of being a shared approach the process is often derisked by contracting out. In a world where most funding is competitive, reputations depend on it, no one wants to be responsible for a failed bid, it is safer to bring people on. But developing good interventions are a partnership sport, whether internal or external. Building teams who can co-create responses to the big challenges facing society and the economy are essential. Many moons ago I used to deliver the intro to Green Book “sheep dip.” It was high level to help a broad set of people grasp the basics.
In this intro I would use the analogy of buying a house as not many people build roads, or housing estates of deliver large scale training programmes or business support. But most people have experience (direct or indirect) of the decision making of buying a house. It’s a big personal investment and we invest time in making that decision. The Green Book can be seen as an abstract concept, buying a house is real, personal bricks and mortar.
So, what is the Green Book for?
It helps answer questions like:
- Is this project worth doing?
- Will it help people and what are the outcomes and objectives we are trying to achieve?
- Is it the best way to spend the money?
- What are the risks?
In house buying terms, it would be why do I need a house? How will it help me live my life? Is it the best way to spend my money? What are the risks of buying a house? What characteristics and criteria do we want our house to meet, a garage, three bedrooms, near to schools? We could decide not to buy, renting might be appropriate, or we might not be able to afford it at this time. Or the houses I can afford aren’t in the right place, or don’t have the characteristics we want. The Green Book approach helps us recognise this and decide not to spend, as much as to spend.
What’s inside?
The Green Book teaches officials how to:
- Appraise options – Compare different ways to solve a problem.
- Evaluate outcomes – Check if the project worked after it’s done.
- Use evidence – Base decisions on facts, not guesses.
- Think long-term – Consider future costs and benefits, not just short-term wins.
In house buying terms it would help us identify different houses which meet our criteria (to a lesser or greater degree i.e. might have a garden but its small). We might reflect on our previous houses and what worked/didn’t work, what we need to avoid or ensure the house has. We will use evidence (technical report, such as mining surveys and house surveys) to make our decisions as it is an important and expensive purchase, we will weigh up the area, the trade-offs, what are we prepared to sacrifice in order to achieve the house we want.
What are the five key parts? (The “Five Case Model”)
Every project should be examined from five angles:
- Strategic Case – Does it fit with government goals?
- Economic Case – Is its good value for money?
- Commercial Case – Can we buy or build it successfully?
- Financial Case – Can we afford it?
- Management Case – Can we deliver it properly?
For our house buyer, does it fit with my objectives as a house owner? Am I getting a good deal, is the price worth it for the life it will give me? Am I able to buy it, but can I afford it? Can I maintain it and invest it in?
What changed in 2020?
The 2020 update made sure the Green Book:
- Supports “levelling up” – Helping poorer areas get fair investment.
- Focuses more on social value – Not just money, but how projects help people.
- Improves fairness – So decisions don’t always favour richer regions.
However, the most significant problem to emerge since is how the guidance is deployed and utilised.
What has changed in 2025?
The review found no conclusive evidence that the Green Book itself is biased. However, it identified six key issues that need fixing to improve how investment decisions are made and the processes involved:
- Inconsistent application of Green Book guidance across departments.
- Over-reliance on narrow cost-benefit analysis.
- Lack of clarity on how to include broader social and regional impacts.
- Insufficient training for officials using the Green Book.
- Weak integration of place-based thinking (e.g. regional needs).
- Limited transparency in how decisions are made.
For the house buyer this translates to inconsistently applying evidence-based approaches to your decisions. Not being transparent with the rest of your family on how you are making decisions and on what basis, and ignoring where the house is altogether, all unhelpful approaches to a large investment. Only relying on the cost of the quantifiable benefits (i.e. will it gain in value, will it cost me a lot to repair, will it cost me a lot to heat, is it cheaper to rent?) to judge which house is the best, not whether it allows you to live closer to your mother, or enables you to have friends round, or allows you to send your children to a good school. Not the things that make a house a home that suits all your needs.
The use of just the BCR to rank projects leads to a process that only values the quantifiable benefits not the holistic societal benefits. The Green Book has never advocated for this approach. In fact, the guidance would demand you make sure all options meet the holistic requirements and objectives, and you only do a BCR analysis on the ones that achieve that. So, the quantitative cost assessment is only conducted on those options that deliver. Another issue is people start this process with one solution to the problem, in house buying the equivalent would be to only look at one house, madness, right?
The reaction to the review has been generally good, many welcomed the acknowledgment of regional disparities and the commitment to reform. Economists praised the move to broaden appraisal methods beyond just cost-benefit analysis.
HM Treasury intend to roll out new training and tools in 2025–2026, monitor how departments apply the updated guidance and possibly revise the discount rate and other technical assumptions to better reflect long-term and regional benefits.
Some critics have said the review didn’t go far enough, especially in tackling the deep-rooted structural bias in how projects are valued. However, this isn’t an issue for the guidance it about challenging the process to ensure the problems raised above don’t happen. A review of national, regional, and local government processes, knowledge and understanding has to be reviewed and acted upon. Implementation is key—without proper follow-through, the changes could be “just words on paper.”
HM Treasury convened a panel of external advisers at the end of the review process. The purpose of this panel was to scrutinise the findings and actions set out in this report, and ensure that they were as credible, effective and ambitious as possible. The panel was comprised of representatives from DfT, Greater Manchester Combined Authority, Liverpool City Region Combined Authority, MHCLG and West Yorkshire Combined Authority, as well as Professor Rebecca Riley and Professor Henry Overman.
Read the full Green Book Review: Findings and Actions.
Rebecca Riley has also been named in The Economist.
This blog was written by Rebecca Riley, Associate Professor for Enterprise, Engagement and Impact and Co-Director of City-REDI, University of Birmingham.
Disclaimer:
The views expressed in this analysis post are those of the author and not necessarily those of City-REDI or the University of Birmingham.