The Government is committed to continuing improvement in the delivery of public services. A major part of this is ensuring that public funds are spent on activities that provide the greatest benefits to society, and that they are spent in the most efficient way.
The Treasury has, for many years, provided guidance to other public sector bodies on how proposals should be appraised, before significant funds are committed - and how past and present activities should be evaluated. This new edition incorporates revised guidance, to encourage a more thorough, long-term and analytically robust approach to appraisal and evaluation. It is relevant to all appraisals and evaluations.
Appraisal, done properly, is not rocket science, but it is crucially important and needs to be carried out carefully. Decisions taken at the appraisal stage affect the whole lifecycle of new policies, programmes and projects. Similarly, the proper evaluation of previous initiatives is essential in avoiding past mistakes and to enable us to learn from experience. The Green Book therefore constitutes binding guidance for departments and executive agencies.
This edition of the Green Book is the first which has been preceded and helped by a consultation. The consultation process has proved invaluable in shaping the final guidance. While the results have shown widespread support for the main changes proposed, the consultation has particularly helped in making the guidance clearer and more closely tailored to users' needs.
Amongst the main changes are the following. First, there is a stronger emphasis on the identification, management and realisation of benefits - in short, focusing on the end in sight, right from the beginning. Secondly, the new edition "unbundles" the discount rate, introducing a rate of 3.5% in real terms, based on social time preference, while taking account of the other factors which were in practice often implicitly bundled up in the old 6% real figure. In particular, the new Green Book includes, for the first time, an explicit adjustment procedure to redress the systematic optimism ("optimism bias") that historically has afflicted the appraisal process. Finally, there is greater emphasis on assessing the differential impacts of proposals on the various groups in our society, where these are likely to be significant.
The Treasury is grateful for the significant contributions to the development of this edition of the Green Book made by many others, working across government and elsewhere. Particular gratitude is due to those who participated in the consultation process and provided such detailed and valuable comments. We hope that the final version reflects the quality of these contributions.
Joe Grice
Chief Economist and Director, Public Services
HM Treasury