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16 January 2003
The new guidance will come into effect in full on 1 April 2003. In the meantime, the new discount rate should continue to be applied to all ‘policy’ appraisals, as announced on 24 July 2002. In this context, ‘policies’ are defined as those proposals that do not involve additional physical assets, or where the use of physical assets is not a material element of the overall cost.
The rate will apply from 1 April 2003 for all other appraisals, although in practice appraisers should now move to the new guidance, as the following cut off rule will apply.
Project appraisals that have reached the Invitation to Tender (ITT), or Invitation to Negotiate (ITN), stages by 1 April 2003 may be allowed to continue, even if they have not been assessed under new guidance. Projects that have not yet reached this point should use the new guidance. In this context projects are defined as proposals that involve significant additional physical assets (or where the use of physical assets is material to the overall cost).
The transition arrangements were a major part of the consultation, and some departments requested flexibility in the implementation of the guidance as part of that process. The presumption is against further derogations. But if there are such perceived needs, these should be discussed with the Treasury, as a matter of urgency.
Green Book 2003 index