In a Q&A for a charity sector journal a few years ago, I was asked what three books have been the most influential in terms of my career. One of them I mentioned was the Treasury Green Book on appraisal evaluation (another was the Grapes of Wrath – I was not too sad!).
I picked it because it attempts to bring some order and sensible, consistent methodology as to how we decide between different projects, and that is something that is extremely important and has come into almost all the jobs I have done, in one way or another. It not only helps determine what happens with public investment, but has spread as a sort of ‘bible’ into many areas, including the charity sector that I then worked in.
But like any methodology, it has flaws and so it is welcome that Rachel Reeves has commissioned a revised version of it (as did the former chancellor Rishi Sunak).
Many of the ideas for change that have been floated should make it a ‘better’ Green Book. Some hope that at least a sub-set of the technical changes will lead, relatively, to more money going outside London and the South East as on a crude per person metric that part of the country seems to do a lot better than elsewhere at present.
More emphasis on the potential – if less certain - benefits of transformational projects and assessing a number of projects all focused in a place together, instead of singly, may well lead to some of this. Reducing the brutalness of the infamous Benefit Cost Ratio test, so that a score of less than one for this does not automatically rule you out, may also help. Of course, all this needs to be done with care as government really does need to get maximum bang for its buck in allocating precious public investment.
But it’s not really the Green Book methodology that is holding public investment outside the South East back: it’s much more the way that the Green Book is used.
If we compare projects in different parts of the country and make them compete then there is very likely to be a bias towards London and the South East where benefits often seem more certain and are often likely to be realised in a shorter time frame. But if the aim of the Green Book is more to find the best ways of achieving a strategic objective, then that critique falls away.
If the task is how to regenerate Midlands towns, or link two northern towns better, then the Green Book methodology can help us do that in the most economically (and socially) efficient way. Making the strategic case the heart of the use of the Green Book is therefore crucial. Aligned with that, if ministers want more of whatever public investment is available to go outside the London and the South East, to help achieve their goal that growth is felt "in every part of the United Kingdom", then they should make that clearer (and think about the politics of saying they want to invest less in London!).
Ultimately the government should think of going further and intensify their devolution trajectory by allocating more capital budgets to regional and local areas and by allowing them to raise and borrow money more easily so that they are taking on some of the risk inherent in any project.
Today The Future Governance Forum has published our report, ‘The Green Book and getting more investment into the regions', with recommendations for changing the Green Book to ensure areas outside of the South East get a better deal on public investment. It calls on government to change the way civil servants use the Green Book, by doing more to promote the strategic case for investment projects outside of the South East, and not simply comparing them to projects in the South East. And it recommends that government must also provide a clear policy steer to Whitehall that it wants to see more investment outside the South East to enable the Green Book to help deliver its aim that that growth is felt "in every part of the United Kingdom".
Dan Corry is the Future Governance Forum’s chief economist and has served as head of the Number 10 Policy Unit and senior adviser to the prime minister on the economy from 2007 to 2010. He was appointed as a Non-Executive Director on the Defra board in September.