- Transport, housing and social infrastructure projects in
every postcode to get a fairer hearing from the Treasury as
Chancellor changes appraisal rules.
- Green Book discount rate cut to be from 3.5% to 3%,
strengthening the case for transformational infrastructure
investment driving growth across the country.
- New place-based business cases will put local priorities in
places like Plymouth, Port Talbot, Liverpool and Birmingham at
the heart of investment decisions.
Growth and opportunity will be spread to every postcode of the
country, as the Chancellor brings down barriers holding back
investment in people and places.
Ahead of a speech that will be delivered on Monday (7 September),
Chancellor has announced major changes to
the Green Book, the Treasury's manual for appraising public
investment decisions.
The changes mean the future benefits of long-term investment, the
kind that takes years to be fully realised, are given greater
weight than ever before.
Chancellor of the Exchequer MP said:
"Good growth in every postcode needs good infrastructure from
trams and trains to houses and schools. That's why we're
reforming investment rules so projects get a fair hearing in all
places from Plymouth to Port Talbot.
"Until now, the Treasury's own rulebook has worked against the
transformational investment that places UK-wide need. Today we're
changing that, so long-term benefits for communities count for
what they're really worth."
The core change made will be to the headline discount rate - used
to value the long-term benefits of investment - which will be
reduced from 3.5% to 3%.
Discounting is the Treasury's way of comparing costs and benefits
that fall at different points in time, on a fair basis. Just as
£100 today is generally worth more to a household than the
promise of £100 in ten years' time, the same logic has applied to
how government values long-term investment.
The Green Book discount rate is the mechanism that reflects that
difference. In practice, this makes it easier for long-term,
transformational projects to demonstrate their full value, rather
than being undervalued simply because their benefits take years
to arrive.
The government is also progressing new place-based business
cases. These will take a new approach to appraisal, one that uses
analysis to understand the economic potential of a place and then
identify the right package of interventions to unlock that
potential. That means assessing places not on where they are
today, but on what they could become.
This approach has first been rolled out in Plymouth, Liverpool,
Birmingham and Port Talbot, working directly with local leaders
to develop place-based business cases for each area's specific
priorities.
The government will publish its full response to the Green Book
discount rate review, alongside new national guidance to support
other areas developing their own place-based business cases, at
the Budget on 28 October.
The changes come ahead of the Chancellor's speech on Monday, in
which he will set out the government's plan to drive growth in
every postcode.
, Mayor of West Yorkshire
said:
"Growth doesn't happen by accident. It happens when places are
trusted to make the decisions that are right for them, and as
Mayors we know our areas and communities best.
"Empowering local leaders to invest in the projects that will
make the biggest difference for local people and businesses is
how you get growth in every region.
These changes, focusing on long-term benefits and ensuring
projects complement each other, will benefit generations to come.
Leader of Plymouth City Council, Councillor Tudor Evans
OBE said:
Plymouth is delighted to be one of just four pilot areas selected
to pioneer a place-based business case approach.
We have been working closely with HM Treasury and the Ministry of
Housing, Communities and Local Government (MHCLG) to look at the
entire eco-system of a place rather than look at individual
projects, which we hope will help shape a new way of thinking for
public investment.
This is revolutionary in how the Government applies its funding
as it will no longer look at projects in isolation but instead
take a co-ordinated total place approach.
This new form of business case is designed to make sure the end
result what difference projects makes to residents is a key part
to future funding allocations across Government departments.
