The Green Book 2026: updates following the 2025 review

Public investment decisions across the United Kingdom are underpinned by HM Treasury’s Green Book, the government’s guidance on appraisal. In January 2025 the Chancellor announced a review of the Green Book and how it is being applied in practice. The review culminated in the publication of Green Book Review 2025: Findings and actions[1] and was followed by a revised edition of the Green Book in early 2026.

This article summarises the background to the review, explains the core changes introduced in 2026, and considers the implications for London and for appraisal practice within the Greater London Authority (GLA).

What is the Green Book?

The Green Book is the UK government’s guidance on appraisal: the process of assessing the costs, benefits and risks of different options for achieving government objectives. It does not set policy objectives and it does not make decisions. Rather, it provides a structured framework to help officials give objective and evidence-based advice to ministers and other decision makers.

Appraisal is part of, what the Treasury terms, the wider ROAMEF policy-making cycle: rationale, objectives, appraisal, monitoring, evaluation and feedback. The Green Book focuses primarily on the early stages, ensuring that a proposal has a clear case for change, defined objectives and a transparent comparison of options.

In practice, the Green Book underpins the economic and strategic cases within the Five Case Model used for business cases across central government and, increasingly, in local and regional government.

The Green Book guidance is mandatory for central government departments and arm’s length bodies and is widely adopted by devolved administrations and local authorities. For London, it shapes the analytical standards expected in appraisals of transport, housing, regeneration, skills and environmental interventions.

Why was the Green Book reviewed in 2025?

The 2025 review was initiated against a backdrop of long-standing debate about whether public investment appraisal adequately supports growth across different parts of the country. Stakeholders from local and regional government, academia and the private sector raised concerns about both the content of the guidance and its application in practice.

The review identified six major issues:

Continued over-emphasis on benefit-cost ratios (BCRs) in decision making.
Overly long and complex guidance.
Capacity and capability gaps across the public sector.
Limited transparency of business cases.
Insufficient emphasis on place-based objectives.
Challenges in assessing transformational change.

Importantly, the review did not find conclusive evidence that the Green Book’s underlying methodology was regionally biased. However, it concluded that improvements were needed in how appraisal frameworks reflect place-based objectives, long-term transformation and proportionality. It also announced an independent review of the discount rate to ensure the fair assessment of long-term benefits arising from transformational investments.

The 2025 findings therefore signalled reform in emphasis and application rather than a rejection of welfare-based cost-benefit analysis.

What has changed in the 2026 Green Book?

The 2026 edition of the Green Book reflects the actions taken by the Treasury to address the issues identified in the 2025 review. While its analytical foundations remain consistent with previous editions, several important clarifications and practical improvements have been introduced.

Clarifying what ‘value for money’ means

The updated Green Book places renewed emphasis on what is meant by value for money. It makes clear that value for money is a balanced judgement about the optimal use of public resources to achieve objectives. It is not determined by a single headline metric.

In particular, the guidance reinforces that decision makers should consider:

Monetised social costs and benefits
Non-monetised impacts
Risk and uncertainty
Distributional effects
Public sector financial impact

This clarification addresses concerns raised during the review that appraisal outcomes were sometimes interpreted too narrowly. The revised guidance reiterates that monetised results are an important part of the evidence base, but they do not in isolation determine whether a proposal represents value for money.

Clarifying the role of benefit–cost ratios

Closely linked to the value for money clarification is a more explicit statement on the role of benefit–cost ratios (BCRs). The 2026 Green Book confirms that allocating funding solely on the basis of BCRs, or applying arbitrary BCR thresholds, is not appropriate.

BCRs are summary indicators designed to support judgement. They help to compare options on a consistent basis, but they are not decision rules. A proposal with a lower BCR may still represent value for money where there is strong wider justification, including significant non-monetised benefits, distributional considerations or strategic alignment.

This reinforces the principle that appraisal is designed to inform balanced decision making rather than to generate mechanistic rankings.

Improving how information is presented to decision makers

The revised Green Book also improves the way appraisal results are presented. Clearer appraisal summary tables bring together the full range of impacts of different options in a single structured format.

By presenting these dimensions together, the guidance supports more transparent communication of trade-offs. This change responds directly to feedback from the review that decision makers require a clearer view of the overall picture rather than isolated technical outputs.

Streamlining and clarifying the guidance

A further outcome of the review is a substantial simplification of the document itself. Stakeholders highlighted that the previous Green Book had become lengthy and difficult to navigate.

The 2026 edition is shorter (by about 40%, according to the Treasury) and has been reorganised to improve clarity and accessibility. Concepts are explained more directly, duplication has been removed and the structure has been simplified.

This streamlining is not meant to be a reduction in analytical standards but rather a way to make the guidance easier to apply consistently across the public sector. For practitioners, this should reduce unnecessary complexity while retaining rigour.

What’s still to come

While the 2026 Green Book incorporates several clarifications and usability improvements, some of the issues identified in the 2025 review are the subject of further work.

Place-based analysis

The review highlighted concerns that appraisal frameworks may not always adequately reflect place-based objectives. Although the 2026 Green Book reiterates the importance of distributional and spatial analysis, it does not introduce major new guidance in this area.

Instead, HM Treasury has committed to further research and pilot exercises, including the development of place-based business cases with partners in Plymouth, Birmingham, Liverpool and Port Talbot. These pilots are intended to explore how appraisal can better assess packages of interventions and the cumulative effects of coordinated investment within particular areas.

The outcomes of this work are expected to inform future updates to the guidance.

Transformational change

Similarly, while the revised Green Book acknowledges the challenge of assessing transformational change, it does not introduce new quantitative techniques for capturing such effects. The existing framework continues to require a clear theory of change and robust evidence where claims of wider economic or systemic impact are made.

Further analytical work and consultation are planned to improve the treatment of transformational programmes, particularly where impacts are long-term, system-wide and subject to significant uncertainty.

Discount rates

The 2025 review also announced an independent review of the Green Book discount rate. The 2026 Green Book retains the existing Social Time Preference Rate pending the outcome of that review.

Discount rates play a central role in determining the present value of long-term costs and benefits. This is particularly relevant for infrastructure, decarbonisation and resilience investments, where benefits accrue over extended periods.

The independent review is intended to ensure that the treatment of long-term and intergenerational impacts remains appropriate. Any changes arising from that work would be expected to follow consultation and formal update of the guidance.

Implications for London and GLA Economics

The 2026 Green Book does not alter the fundamental analytical framework used in London. However, it sharpens expectations in several areas that are directly relevant to appraisal practice within the GLA Group, and for Green Book practitioners working in London.

First, the clearer articulation of value for money as a balanced judgement reinforces established practice within GLA and Transport for London (TfL). Appraisals undertaken for Mayoral programmes and investment decisions will continue to present monetised results alongside non-monetised impacts, risk analysis and distributional considerations. The updated guidance strengthens the case for ensuring that these elements are integrated and clearly explained rather than treated as an “add on” to a single summary metric.

Second, the clarification of the role of benefit–cost ratios supports a balanced approach to interpreting appraisal results. For London, where interventions frequently generate complex social, environmental and distributional impacts, the confirmation that BCRs are not mechanistic decision rules is important. It provides clearer national backing for appraisal practice that considers wider justification and context when advising decision makers.

Third, the improved structure of appraisal summary tables aligns with the need for transparent and accessible communication. Clear presentation of the full range of impacts is particularly important in a city as economically and socially diverse as London. Decision makers require a concise but comprehensive view of trade-offs, and the revised guidance supports this objective.

Finally, the streamlined format of the Green Book should make it more accessible for a wider group of practitioners across the GLA Group and partner organisations. Simplification of the document reduces ambiguity and supports more proportionate appraisal, particularly across programmes that involve multiple interrelated interventions.

The GLA is represented on the government’s Green Book network steering group and, alongside TfL, actively participated in the Treasury’s review and update of the guidance. The revised Green Book will be reflected in the advice, reviews and training provided by GLA Economics, ensuring that appraisal practice in London remains aligned with national standards while continuing to reflect the capital’s specific economic and social context.

Conclusion

The GLA and TfL welcome the new edition of the Green Book and its simplified format. The new 2026 edition represents a positive evolution rather than a departure in UK appraisal practice. The core welfare-based framework remains in place, but with clearer emphasis on value for money and use of the BCR, proportionality and transparency.

Practitioners will await with interest the lessons learned from place-based business case pilots, the forthcoming guidance on transformational change, and the review of the discount rate. These could lead to more substantive changes in the way appraisal is undertaken in the capital.