Navigating the New Landscape of Public Investment

The 2025 HM Treasury Green Book review marks a watershed moment for UK public investment. It signals a fundamental shift from a rigid, numbers-led approach to a more holistic, place-focused framework. This guide is designed to help economic development practitioners understand these changes and equip you with the tools to succeed in the new era of appraisal.

The Philosophy of Reform

The reforms are a direct response to criticism that the old system, with its heavy reliance on the Benefit-Cost Ratio (BCR), perpetuated regional inequalities. The new philosophy redefines "value for money" from a narrow economic calculation to a broad, strategic judgement about an investment's contribution to creating opportunity in specific places.

➔

From Projects to Places

The focus shifts from appraising single projects to justifying strategic portfolios of investment for a defined area.

➔

From Bids to Strategy

The practitioner's role evolves from 'bid writer' to 'strategic place-maker', architecting long-term local visions.

➔

From Calculation to Narrative

Success now depends on a compelling, evidence-based story, with the Strategic Case taking precedence over the Economic Case.

A Fundamental Shift in Appraisal

The 2025 reforms represent a clear break from the past. The table below contrasts the core tenets of the old appraisal paradigm with the new, place-based approach. Interact with the rows to see the key differences.

The 'Old' Paradigm (Pre-2025)

  • Focus: Single, discrete projects.
  • Primary Driver: The Economic Case and achieving a high Benefit-Cost Ratio (BCR).
  • Primary Lens: National welfare (UK Plc), often obscuring local impacts.
  • Value for Money: A technical calculation based on monetised costs and benefits.
  • Approach: Siloed bidding for specific, ring-fenced departmental funding pots.

The 'New' Paradigm (Post-2026)

  • Focus: A portfolio of complementary projects.
  • Primary Driver: The Strategic Case and a compelling place-based narrative.
  • Primary Lens: Place-based impacts, including distributional effects within the area.
  • Value for Money: A balanced judgement weighing the BCR against strategic fit and non-monetisable value.
  • Approach: Integrated, cross-sectoral strategy building a coherent vision.

The Six Core Reforms

The review announced six key actions that will be embedded in the new Green Book. Click on each reform to explore its implications for practitioners. The chart visualises the fundamental shift in emphasis within a business case.

A Practical Toolkit for Place-Based Cases

The new framework requires a new operational approach. This step-by-step guide, based on lessons from funds like LUF, provides a blueprint for developing a compelling place-based business case.

Step 1: Define the 'Place' & Strategic Objectives

Start with a deep, data-driven diagnosis of your area's challenges and opportunities. Use this evidence to establish clear, SMART strategic objectives that will anchor the entire business case. This is the foundation of your narrative.

▼

Step 2: Develop the Portfolio of Interventions

Identify a portfolio of complementary projects that work together to meet your objectives. The key is to demonstrate synergy—how the value of the whole package is greater than the sum of its parts. Develop a 'Theory of Change' to map how these interventions lead to your desired outcomes.

▼

Step 3: Build the Strategic Case as the Centre of Gravity

Weave your evidence, objectives, and portfolio into a single, compelling narrative. The Strategic Case is now the most critical component. It must tell a powerful story about your place's potential and why this specific set of investments is the right strategy to unlock it.

▼

Step 4: Deploy the Economic Case in a Supporting Role

The Economic Case is still essential, but its role is to support the strategic narrative. Present the BCR as one metric among many. Give equal prominence to non-monetisable benefits (using wellbeing valuation where possible) and distributional analysis showing who benefits within your community.

Strategic Recommendations

The reforms require a proactive response. Here are key recommendations for practitioners, local authority leaders, and central government to successfully navigate and implement this new framework.

For Practitioners

  • Embrace the Strategist Role: Move beyond bid-writing. Focus on building skills in strategic analysis, partnership management, and narrative communication.
  • Build Your Evidence Base: Proactively and continuously collect data on your place's unique conditions. This repository is the foundation of future success.
  • Think in Portfolios: Shift from developing single projects to curating integrated portfolios of complementary interventions that deliver transformational change.

For Local Authority Leaders

  • Champion Collaboration: Break down internal silos. Mandate cross-departmental work on place-based strategies and build alliances with neighbours.
  • Invest in In-House Capability: Resist outsourcing strategic thinking. Invest in your own policy and analysis teams—they are a core prerequisite for securing investment.
  • Engage on Strategy, Not Bids: Approach central government with a coherent, long-term vision for your place, not just a list of funding requests.

For Central Government

  • Resource the Capability Uplift: The success of the reforms hinges on local partners' ability to meet the new demands. Adequately fund and scale training and support.
  • Ensure Consistency & Stability: Apply the new principles consistently across all funding streams to allow for effective long-term local planning.
  • Uphold Analytical Rigour: Ensure the new flexibility enables genuinely valuable strategic investments, not just politically favoured projects lacking a sound rationale.