HM Treasury’s latest Green Book update brings a much needed reset to how appraisals are developed. The refreshed guidance is clearer, more flexible, and better aligned with the realities faced by practitioners. Perhaps most importantly, the revised guidance introduces a fairer, more balanced framework for assessing investment proposals and business cases across the public, private and charity sectors. It places greater weight on the underlying need for investment, moving beyond the narrow value‑for‑money thresholds that historically have underpinned decision-making processes.
In this blog, we look at the challenges posed by previous versions of the Green Book, show how the latest update creates more space to make a compelling case for investment, and outline the practical considerations to keep in mind when applying the new guidance.
Challenges to date
In an increasingly competitive funding landscape, business cases must clearly articulate strategic fit, demonstrate good public value and provide evidence of deliverability to stand out against a growing volume of high quality submissions. Our decade of experience in business case development and appraisal has highlighted a consistent set of challenges in securing funding. The most significant are set out below.
1. BCRs used as litmus test
For years, Benefit Cost Ratios (BCRs) have been treated as a pass or fail test in gateway decision-making processes. This narrow use of BCRs has, in practice, disadvantaged schemes in certain areas of the country and has sidelined places, even when projects deliver clear strategic and social benefits.
2. Inconsistent treatment of place‑based and distributional impacts
Earlier Green Book guidance name‑checked these issues but offered little on how to assess them, resulting in inconsistent application and appraisals that fail to capture regional and social disparities.
3. No clear steer on proportionality
The Green Book has lacked a clear expectation that appraisal effort should be proportionate to project scale, complexity, and risk. This gap has led to a uniform approach to assessment, where smaller schemes were over‑analysed and large, high‑risk interventions were sometimes insufficiently appraised.
4. Guidance that was hard to use
Past iterations of the Green Book offered depth but not usability, resulting in guidance that was overly complex and failed to tackle many of the practical issues raised by practitioners.
5. Strategic rationale and expected impact
Previous editions of the Green Book acknowledged the importance of linking an investment’s rationale to the outcomes it aims to deliver, but they stopped short of explaining how to build that connection. Without practical guidance on developing a Theory of Change, the five cases of the business case model often became disconnected, weakening the “golden thread” that should tie together a project’s inputs and objectives in the Strategic Case with the outcomes and impacts set out in the Economic Case.
6. Optioneering
Whilst an important element of the appraisal process, the optioneering process and guidance within the previous Green Book was overly cumbersome and disproportionate to many types of intervention.
The new Green Book
The revised Green Book takes significant steps towards addressing challenges practitioners have faced to date. Most notably, it introduces a more holistic approach to developing business cases, placing greater emphasis on building a robust Strategic Case, clearly articulating the case for change, and setting out a well-defined Theory of Change.
The new Green Book is also far more concise, logically structured, and easier to navigate. It focuses on the core principles of appraisal, supported by supplementary technical modelling guidance provided by departments such as MHCLG, DfT and Homes England.
Importantly, the updated guidance places stronger emphasis on assessing social costs and benefits, culminating in a more rounded view of a scheme’s total social value. It removes prescriptive value for money thresholds, giving schemes more flexibility to demonstrate their wider value, through the presentation of net present social value, benefit–cost ratios, return on public sector cost, and net present unit cost in parallel. This shift reduces the historic overreliance on a single metric and enables a more balanced, meaningful assessment of public value.
They key changes are summarised below:
Strategic rationale
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Clearer guidance on setting the investment rationale upfront. This includes clearly identifying the market failures and strategic needs that should shape the development of a compelling case for change.
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Practitioners are now expected to develop a Theory of Change that sets out a clear line of sight between inputs, outputs, and intended outcomes.
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Guidance now requires a clearly defined Business‑as‑Usual scenario, enabling appraisers to better assess the true net additionality of a proposal.
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The revised framework gives projects more scope to evidence and explain potential transformational change, encouraging more nuanced consideration of wider place‑based and long‑term benefit
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Optioneering
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Option generation based on project objectives and critical success factors.
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A more flexible and proportionate approach to long-list options appraisal, with several approaches outlined, which can be utilised depending on the scale of investment.
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Enhanced Place-based and distributional considerations
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Whilst previous iterations to the Green Book over recent years gave more prominence to place-based and distributional impacts these, with hindsight were ultimately secondary considerations with guidance relegated to an Annex form at the back of the Green Book.The inclusion of these now within the main body of the Green Book (Chapter 7) sets a clearer path for the inclusion and consideration of place-based impacts within the appraisal process rather than being pulled back into a purely national view of the impact of intervention. Indeed, the document opens the door for place-based effects to be given more prominence by encouraging practitioners to use place-based analysis to distinguish between the effects of a proposal on their area alongside effects the United Kingdom as a whole. In keeping with a more succinct, framework approach, further guidance on assessing place-based impacts are provided in Section 6 of the updated 2026 MHCLG appraisal guidance ( The MHCLG Appraisal Guide).
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Clearer guidance on how to quantify and apply distributional weighting to identify how the effects of intervention benefit different groups. This helps to strike a fair balance on the impact of intervention throughout different parts of the country. The previous approach effectively disadvantaged areas in the UK with lower property prices, productivity and labour costs.
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Incorporating place‑based economic impacts at the local level helps to strengthen the ‘golden thread’ across all business case dimensions. It also ensures that the Economic Case clearly demonstrates how the proposal contributes to the local economic objectives outlined in the Strategic Case.
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Value for money
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Continued reliance on supplementary departmental guidance, which will need to be refreshed to ensure alignment with the updated central Green Book principles.
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Expanded and more detailed topic specific guidance on areas such as housing, commercial development, employment, and labour supply.
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A stronger expectation to use monitoring data and robust research evidence to inform the assumptions underpinning economic appraisal.
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Greater clarity on the application of optimism bias which is often inconsistently applied.
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Revised discounting guidance is expected to be published in 2026 which is anticipated to include updated discount rates more appropriate for interventions which have longer term transformational impacts.
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A reframed approach to value for money, with explicit recognition that proposals with a BCR below 1 can still deliver value, and that BCR thresholds should not be used as rigid decision-making tools.
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A shift towards a broader set of value metrics, by considering the BCR alongside other indicators such as return on public sector costs and net present unit costs to better capture social value.
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A simplified and more intuitive Appraisal Summary Table, improving transparency.
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What does this mean for business cases and funding opportunities going forward?
The newly published HMT Green Book marks an important step forward in how we make the case for investment. As we highlighted in
our recent Funding and Business Case Insight, earlier versions of the Green Book, and many funding programmes, placed too much emphasis on meeting strict value for money thresholds. This often overlooked the wider strategic and place-based benefits that many projects deliver. We called for a fairer, more balanced framework that reduces geographic bias and gives areas most in need a genuine opportunity to secure investment.
The revised Green Book moves firmly in that direction. By shifting the focus away from narrow value for money metrics and towards a more holistic evidence base, it enables business cases to present a fuller picture of a project’s impact. By shifting the emphasis beyond narrow BCR thresholds, the revised Green Book creates space for projects that deliver wider economic and social value to make a stronger case for investment across all regions and sectors. But for this to be realised, several practical issues must still be address. These are explored below.
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The revised Green Book offers a simpler and more streamlined framework for developing investment proposals. However, it still relies on a suite of technical guidance that shapes how specific benefits are quantified. For its ambitions to be fully realised, technical guidance needs to align with the principles set out in the refreshed Green Book. Only then can appraisal consistently support fair, place‑focused investment decisions.
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The latest updates to the Green Book place greater emphasis on establishing an investment rationale upfront, shifting appraisal away from a narrow focus on value for money and toward a more balanced assessment. As a result, business cases can present a more holistic impact of proposed interventions rather than relying solely on traditional economic metrics.
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The updated guidance emphasises proportionality, reminding appraisers to match the depth of analysis to a proposal’s scale, cost, complexity and risk. For smaller schemes, this means avoiding unnecessary optioneering and recognising that some economic and social benefits cannot be monetised yet still provide a strong strategic case for investment.
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We’ve seen first‑hand how rigid funding criteria and prescriptive application forms can constrain the development of business cases. To unlock the full value of the updated Green Book, funding administrators now need to bring their processes into line with the new guidance by amending application processes so that they are proportionate to requested funding giving all places and projects the chance to secure the funding they need.
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