All to play for – but the Green Book still serves from Treasury

Us economists live sheltered lives, with an abacus in one hand and a well-worn copy of the Green Book in the other. So, when a Spending Review and a Green Book consultation land on the same day, it’s basically our version of a solar eclipse. Now I’ve fully recovered from all this interplanetary excitement, I thought it only fair I attempted to unpick what the GB review findings mean for us economic development folks.

Evolution, not revolution

When the Chancellor announced the Green Book review back in January there was much excited chatter in certain quarters – principally north of the Watford Gap – that HMT was about to completely rewrite the rules governing public investment orthodoxy. Although I don’t profess to be prophetic – my wife holds that talent – my blogs did pour a sizeable glass of cold water on such optimism bias (see what I did there?).

The main takeaway was that the review had “not found conclusive evidence that the methodology set out in the Green Book is biased towards certain regions”. These are not my words but lifted directly from the HMT findings. Whilst a simple sentence, it’s also quite telling.  It’s worth remembering that the argument often disseminating from some politicians was that it was biased towards certain regions…namely London and the Southeast. With Wimbledon just around the corner, HMT have seemingly lobbed that argument back over the net.

Rumours fade, land value uplift rises

Avid followers of my blogging – all two of you – will recall that when politicians talk of “bias” they are really pointing their fingers to an abstract economic modelling technique called land value uplift. Hold on! Hold on! Please stay with me, this matters to getting your project approved.

Very briefly – I promise – land value uplift or LVU for us Green Book fanatics, is the government’s preferred method of assessing benefit from land and property schemes. If you want to get your regeneration scheme over the line, you need to make sure there’s sufficient “LVU” or other benefits to get a good enough Benefit Cost Ratio, or BCR. However, it’s worth noting that the focus now is often more on those external benefits such as wider area impacts rather than LVU. Okay, I’ll stop now.

So, what did HMT say about “LVU” – the longstanding bugbear of practitioners with depressed land values? In their findings it stated that the “government’s approach to assessing land value uplift does not skew decisions in favour of more affluent areas, at the expense of less affluent areas.” A-ha! The king is dead. Long live the king.

Guidance updated, orthodoxy untouched?

Whilst there was a much-welcomed discussion around the need to emphasise place-based analysis, the constant over-emphasis on BCRs, plus the long and complicated guidance (nothing to see here, constable), it is telling that after cutting through the smog, HMT have seemingly backed the core Green Book methodology (for built development schemes at least).  I will reiterate that this does not diminish the recommendations – which are to be saluted – but simply to playback the HMT words.

A new Green Book is pencilled in for 2026.  Game, set and match for HMT orthodoxy?

Simon Dancer is a Board Member of the iED, and a Director at AMION Consulting. Read Green Book Review 2025: Findings and actions.

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