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24 July 2002

CONSULTATION ON A REVISED GREEN BOOK ANNOUNCED

The Treasury is today launching a consultation on updated guidance for the appraisal and evaluation of policies and projects.

A new version of Appraisal and Evaluation in Central Government, also known as the 'Green Book', is being published today in draft form for consultation. The new approach is intended to increase the transparency and robustness of public spending decisions made in Government, and ensure that investment decisions with long-term paybacks are suitably valued.

The main proposed changes include:

  • Greater clarity on the valuation of benefits of spending proposals.
  • An 'unbundling' into its constituent parts of the 6 per cent discount rate used to estimate the future value of Government projects. The main elements of the discount rate that are now being made explicit are the benefits and time profiles for proposals and the demonstrated tendency of appraisers to be over-optimistic when estimating costs.
  • Explicit consideration in assessments of the distributional implications of proposals, to reflect differences in the potential effects on different socio-economic groups.
  • Further guidance on the treatment of differences in the treatment of tax in appraisals.
  • Explicit advocacy of wider cross-government steps to improve the effectiveness of project management (such as the OGC's Gateway Review process, and guidance on writing business cases).

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NOTES TO EDITORS

1. The Green Book is a technical, best practice guide to the techniques and issues that must be considered when carrying out economic appraisals and evaluations. The latest edition was issued in 1997.

2. Four documents are published today:

  • The Consultation Paper;
  • A draft of the revised Green Book: Appraisal and Evaluation in Central Government;
  • A report by KPMG setting out how tax liabilities may differ between PFI options and Public Sector Comparators; and
  • A report by Mott Macdonald on optimism bias.

3. Copies of all documents are available in the Green book section of this site.

4. Press Enquiries to: Malcolm Graves on 020 7211 1366 and Steve Field on 020 7270 5196.

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Press Notices 2002 July to December index