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Like London buses, you wait ages for one then two come along at once. No sooner has the ink dried on my Green Book review blog, than the mandarins at MHCLG dropped a new edition of their own Appraisal Guide. So, what does this mean for us economic development folks? And are there any pointers for their HM Treasury cousins, with the impending Green Book refresh? You know the drill by now, grab a strong coffee and head to a darkened room, we’re diving headfirst back into the stormy seas of business case methodology.
Firstly, as John Major might have said, let’s get back to basics. Whilst your seasoned practitioner would have almost certainly heard of the Green Book, the MHCLG Appraisal Guide has undoubtedly less celebrity status, but that’s not to say it has less influence. Indeed, many of the technical nuances of the business case that determine whether your project gets funding approval, often emanate from MHCLG not HMT. Take another big breath, we’re going subterranean.
The way I often explain the relationship between the Green Book and Appraisal Guide is that the former covers the entirety of government activity, while the latter covers more specific sectoral considerations. To quote directly “Green Book guidance applies to all proposals that concern public spending, taxation, changes to regulations, and changes to the use of existing public assets and resources”. It doesn’t matter if you’re appraising the effect of tariffs on international trade (nothing gets past me) or a youth centre in Gateshead, all proposals should be ‘Green Book-compliant’. The Green Book first ‘hit the shelves’ back in the early 1990s, probably literally, as there was limited internet and email back then.
So where does the MHCLG’s Appraisal Guide fit into this hierarchy I hear nobody shout?
The Appraisal Guide – now on its 3rd edition – is the new(ish) kid on the block, having been first released in 2006.
The focus of the Guide is to “inform spending decisions on housing, commercial property and land use and funding decisions by local authorities”. In broad terms, think of the Appraisal Guide as providing further refinement to areas related to the built environment and regeneration, which are, of course, the bedrocks of economic development.
A-ha! But what if I’m working up a business case which is centred on delivering, say, a cultural project – an arts gallery perhaps. Fear not, you would consult our friends at DCMS and their benefits database (for those of you with grey hairs – or indeed white – you might recall DCMS’s long vanished “White Book”). A business case concerning skills training? Seek out DfE guidance. You get the drift.
Less of the histrionics – what does the new Appraisal Guide mean for me?
Perhaps like Schrödinger’s cat, it’s not what’s new in the Guide but what’s simultaneously stayed the same that matters. Take one final gulp before we return to the surface. But before we start highlighting the updates (which are largely circumspect), I’ve been told by my boss that if I didn’t mention that AMION were a key consultee in the drafting of the new Guide, I’m for the plank.
The main change relates to the recent research on the environmental impacts of housing developments. If you’re interested, the new environmental research studied those impacts which are experienced by the existing community impacted by new housing schemes. The Homes England tool provides detail on the methods and assumptions that have been used to assess environmental outcomes. If you thought my blogging was impregnable, this new toolkit is not for the fainthearted.
There are also updates reflecting the Ministry’s broader scope of responsibilities, plus the social value schematic explaining the distinction between economic, environmental and social impacts is a welcome addition. Released alongside the new Guide was Homes England’s Wider Area Impact Tool. The HE “WAIs Tool” allows practitioners to monetise the wider area impacts of supply-side housing interventions with explicit placemaking and regeneration objectives. The approach follows research prepared by a consultancy beginning with A and ending MION.
Capturing uplift, or capturing headlines?
It’s fair to say the refresh is not a fundamental revision, but nevertheless an improvement. Of particular note is that the bête noire of some practitioners remains…the infamous “land value uplift” calculus. The highly caffeinated readers of my last blog will remember that politicians “North of the Watford Gap” have this metric in their crosshairs for the Green Book review. While I won’t re-run my previous dissection of “LVU” again (lucky you), it’s fascinating to see that MHCLG have planted their departmental flag firmly in the LVU camp, with the new Guide referencing LVU over 80 times and its own chapter. Back over the net to HMT…
Hopefully, this ‘deep dive’ into MHCLG appraisal methodology hasn’t given you the bends. If so, some caffeine will sort you out.
Simon Dancer is a Board Member of the iED, and a Director at AMION Consulting.
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