The Green Book (2022) Lecture Notes

Introduction

• Purpose: Guidance by HM Treasury for appraising policies, programs, and projects.
• Applicability: For central government, arms-length organizations, local authorities, and public servants involved in public resource allocation.
• Five Case Model: A strategic framework to optimize social/public value from public resources.
• Complementary Guidance:
  • Managing Public Money
  • The Business Case Guidance for Programs and Projects
  • The Aqua Book and The Magenta Book
• Scope: Covers public spending, taxation, regulation changes, asset usage, and more.
• Objective: Provide objective analysis for decision-making, with mandatory proportional application for significant resource use.

Appraisal and Evaluation

Principles of Appraisal

• Objective: Assess costs, benefits, and risks of government objectives.
• Social Value: Based on welfare economics, includes diverse effects (environmental, cultural, etc.)
• Stages of Appraisal:
  1. Strategic Assessment
  2. Longlist Analysis
  3. Shortlist Appraisal

Key Appraisal Steps

• Strategic Case: Define rationale and SMART objectives.
• Longlist Analysis: Generate a wide range of viable options.
• Shortlist Appraisal: Detailed analysis using CBA or CEA.
• Option Selection: Based on balance of costs, benefits, and risks.
• Monitoring & Evaluation: Systematic assessment of interventions.

The Five Case Model

1. Strategic Dimension: Aligns with wider policies and objectives.
2. Economic Dimension: Evaluates net value to society.
3. Commercial Dimension: Assesses feasibility of commercial proposals.
4. Financial Dimension: Evaluates impact on public sector budgets.
5. Management Dimension: Ensures realistic delivery plans.

Policy Framework

Policy and Strategic Planning

• Framework: PESTLE analysis for policy development.
• Policy Cycle: Develops from rationale to implementation.
• Strategic Portfolios and Programs: Framework for organizing and managing change.

Overarching Policy Framework

• ROAMEF Cycle: Rationale, Objectives, Appraisal, Monitoring, Evaluation, Feedback.
• Monitoring and Evaluation: Improve policy design and implementation.

Generating Options and Longlist Appraisal

Rationale

• Role: Support policy objectives and understand decision chain effects.
• Constraints and Dependencies: Identify and account early in the process.
• Unquantifiable Factors: Consider in decision making.

Longlist Appraisal Process

• Options Framework-Filter: Structured process to avoid assumptions.
• Critical Success Factors: Essential for proposal success.
• SWOT Analysis: Used to assess option choices.

Shortlist Options Appraisal

Social Cost Benefit and Cost Effectiveness Analysis

• Purpose: Compare social welfare impacts of options.
• Valuation of Costs & Benefits: Includes monetizable and non-monetizable factors.

Discounting and Social Time Preference

• Role: Adjusts for social time preference.
• Standard Rate: 3.5% for most appraisals; adjusted for long-term impact assessments.

Risk and Uncertainty

• Optimism Bias: Tendency to underestimate costs and overestimate benefits.
• Risk Management: Structured approach to managing identified risks.

Monitoring and Evaluation

Importance

• Process Evaluation: Checks if implementation matches the design.
• Impact Evaluation: Assesses the extent of changes and attribution to interventions.

Evaluation in Policy Cycle

• Before Implementation: Set evaluation strategy.
• During Implementation: Monitor progress and adapt as needed.
• Post-Implementation: Assess outcomes and learn for future decisions.

Specialized Topics

Regulatory Impact Assessments

• Purpose: Support appraisal of new legislation.
• Process: Follow the Green Book for consistent methodology.

Place-Based Analysis

• Definition: Analyzing effects specific to geographical areas.
• Use: Important for localized objectives or significant area impacts.

Conclusion

• Holistic Approach: Integration across departments and disciplines is crucial.
• Continuous Improvement: Regular updates and refinements ensure relevance and accuracy.