Updates to the Green Book 2022
Wendy Cheung
On 30th March 2022, updates to HM Treasury’s Green Book, as well as some supplementary guidance and templates, were published. The Green Book is the government guidance on how to appraise policies, programmes and projects, underpinning business cases for public investment. This blog post has been produced by TFDP to summarise the changes to the Green Book and how this impacts Towns who are currently developing Business Cases for Towns Fund projects.
The updates to the Green Book 2022 have been incorporated following feedback from users, building on the methodology from the Green Book 2020, but are minor compared to the 2020 edition. Towns can access the Green Book 2022 via the government website.
In addition to the Green Book, the following guidance and template have been published:
Supplementary Guidance: Value for Money (VfM): a short note on how the best value for money option is reached when applying the Green Book method.
HM Treasury’s Appraisal Summary Tables (AST) have been updated.
What does this mean for Towns currently developing their business cases?
For Towns currently developing their Business Cases, TFDP recommends ensuring they are compliant with the Green Book 2022 edition where feasible. In the next section, we have summarised the key updates and subsequent implications of this.
If you require further assistance in understanding and applying the refreshed Green Book 2022 and supplementary guidance, please reach out to the business case specialists either through your Town Coordinator, or submit an Expert Drop-in Hour form.
What does this mean for Towns who have already submitted, or due to submit their business cases?
If you have already submitted the business cases and summary documents that are compliant with the previous Green Book 2020 edition, no further action is required and Towns are not required to revise their business cases and re-submit summary documents again.
Overview of the Green Book 2022 changes
You can download an overview of the changes from the Green Book 2020 that are relevant to Towns, as well as implications of the changes to Towns developing their Business Cases for the Towns Fund programme below. These changes are fairly minor, so Towns should be able to incorporate these changes in time to submit any outstanding Business Cases.
New supplementary guidance on Value for Money (VfM)
This supplementary guidance has been produced by the HM Treasury, and sets out guidance on how to demonstrate VfM whilst complying with the Green Book and other departmental guidance, including DLUHC’s Appraisal Guide and Wellbeing Guidance for Appraisal. The VfM supplementary guidance reinforces the some of the Green Book’s method and recommendations, including:
VfM should not be based solely on quantified costs and benefits separate from considering the strategic case, and how the option seeks to meet policy objectives. Even if the option presents a higher BCR at the long-list stage, the option should be discounted if they do not meet the SMART objectives.
Where options will deliver additional benefits that cannot be monetised, it is acceptable to recommend the option to decision makers by including the cost of achieving the benefits, which remains an important component of the decision-making process. This will allow decision-makers to determine if it is a price worth paying, even if the BCR appears lower yet the non-monetised benefit(s) is considered essential in achieving the SMART objectives.
The VfM supplementary guidance contains case studies for both the strategic and economic cases and how these two dimensions should be applied in practice. Furthermore, case studies have been provided illustrating how to handle non-monetisable benefits (and costs) in appraisal, as well as when it is acceptable to discount a higher BCR option.
Please note, the VfM guidance should not be considered a substitute to the Green Book guidance, but more a supplement to the Green Book in which practical examples of applying the five-case model and appraisal methods are demonstrated.
What does this mean for Towns?
Although we recommend quantifying and monetising benefits (as well as disbenefits) where feasible, the quantitative analysis only forms one part of the Value for Money assessment. The quantified analysis, including the BCR and NPSV, should be presented alongside a robust, detailed qualitative analysis of (non-monetised) benefits and disbenefits, as well as a strong and compelling strategic case.