Reforming the appraisal of publicly funded infrastructure
Bradshaw Advisory and the Railway Industry Association (RIA) convened senior figures from industry, finance and government to examine one of the most technical yet influential levers of public policy: how the UK appraises infrastructure investment. Though often overlooked, the Green Book determines what the state builds, where and why Participants agreed that reform is necessary, and while the recent review was broadly welcomed, they stressed that lasting success will depend as much on political courage, institutional reform and cultural change as on the revised guidance itself
Key themes of the discussion
1 Over-reliance on BCRs
Participants agreed that benefit-cost ratios (BCRs) continue to dominate decision-making even when they fail to capture strategic or regional value. While some argued that BCRs accurately reflect economic gravity, most saw their dominance as a brake on regional ambition. One combined authority representative cited a northern transport project expected to deliver five times more economic growth than competing schemes, but its wider benefits could not be captured within a conventional BCR and it was therefore not approved.
The 2025 Green Book review identified this over-reliance as a major weakness in the appraisal process It confirmed that the Treasury will update the guidance to make clear that there are no fixed BCR thresholds and that a ratio below one does not automatically indicate poor value for money
Contributors from the defence sector were particularly supportive of this shift, noting that many defence programmes, by their nature, cannot demonstrate conventional value for money through BCRs alone. This reflects a broader recognition of the need to give greater weight to the strategic case within business cases, ensuring that projects with long-term or national importance are not disadvantaged by narrow economic measures.
While participants welcomed the recognition of this issue, they remained concerned about how this will actually work in practice - specifically, how projects with mixed economic and strategic evidence will be compared under the new framework
2. Acknowledge the politics
Participants agreed that the Green Book cannot and should not seek to insulate investment decisions from politics Appraisal operates within a politically charged environment, not in a vacuum, and reform must reflect that reality Two dimensions of this emerged clearly from the discussion
First, the volatility of reform itself A government eager to show quick results risks criticism if early projects are later judged poor value for money. Any move away from established metrics will attract
scrutiny from the media and fiscal watchdogs, meaning the Treasury must design reforms that are politically durable as well as technically sound.
Second, the influence of political priorities on project selection. High BCR schemes are sometimes blocked, while others with weaker economic cases progress because they align with strategic or electoral goals Participants argued that this is not inherently illegitimate: if the policy objective is to close regional divides, achieving that outcome is itself a valid and measurable form of public value
The Green Book and wider appraisal system should therefore acknowledge and make transparent this interaction between political and economic judgement, rather than maintaining the pretence that decisions are made in isolation from politics. One suggestion from a contributor was that regions should have a list of priority areas or investment needs, making the basis for decision-making clearer and expectations more explicit.
3 Public–private misalignment
Participants highlighted a persistent disconnect between public sector appraisal and private sector investment logic. The Green Book is designed to measure social and economic welfare, whereas investors make decisions based on metrics such as risk-adjusted returns and return on capital. This divergence means that projects satisfying revised public value tests may still fail to attract private co-investment if commercial incentives, time horizons or risk profiles do not align.
Several contributors observed that while government aims to crowd in private finance, appraisal and delivery frameworks rarely reflect how businesses actually deploy capital Investors need predictable regulation, transparent planning processes and credible delivery pipelines Without these, even well designed reforms risk producing projects that are publicly approved but commercially unattractive
Participants agreed on the need for a shared framework to bridge this divide. A joint public-private “value framework” could align how risk, reward and impact are assessed across sectors, ensuring that appraisal captures both public benefit and commercial viability. This would enable public and private capital to complement one another, rather than operate through parallel systems with conflicting definitions of value.
4 Devolution → fragmentation
Participants welcomed the move toward place-based models as a way to appraise portfolios of interventions across transport, housing and skills rather than isolated projects. This approach allows local synergies to be captured and supports more integrated forms of devolved investment. However, the discussion identified four structural problems that risk undermining its effectiveness.
First, multiple departmental sign-offs continue to create delay and uncertainty, with projects often requiring approval from several accounting officers before progressing This discourages cross-sector collaboration and makes it difficult to deliver joined-up investment packages
Second, fragmented departmental budgets remain a major constraint. Departments treat capital as their own, resisting pooled funding or coordinated sequencing across housing, transport and regeneration. Participants also pointed to a broader coordination failure between separate funding pots. Transformational projects often rely on linking early-stage brownfield funding with later subsidies or complementary investment streams, but current mechanisms struggle to enable this.
Third, there is a risk of displacement as local areas compete for limited central funds Without coordination, neighbouring authorities may pursue overlapping or competing projects that fail to align into a coherent regional strategy
Finally, participants stressed the need to recognise the wider system benefits of infrastructure. Devolution rightly focuses on local growth, but investment choices must account for national interdependencies. For example, reducing investment in freight corridors in the South East because the region is already prosperous can undermine productivity nationwide when those routes serve housing and industry in other regions.
5. Crowding-in investment
Participants agreed that public budgets alone cannot deliver the scale of infrastructure investment the UK requires. Private finance must play a larger role, but investors need certainty on regulation, procurement and delivery before committing capital
Several examples illustrated this gap A major port operator was prepared to fund nearby rail upgrades but required a guarantee that it could use the improved lines once complete. Without that assurance, the investment could not be justified commercially. Similarly, housing developers cited the difficulty of bringing forward viable schemes under the current Building Safety Regulator regime, where compliance costs make even socially desirable projects financially unattractive.
Participants noted that international investors increasingly expect coherent, long-term regional strategies Aligning government funding streams across transport, housing and skills has helped, but further progress depends on policy consistency and credible delivery The absence of modern partnership models to replace PFI was seen as a missed opportunity Without such vehicles, ‘crowding in’ private capital will remain largely rhetorical
Domestic pension funds, with over £2 trillion in assets, were identified as a potential source of patient capital. Yet defined benefit schemes are de-risking onto insurers and defined contribution schemes remain fragmented. Participants called for bridging mechanisms, such as guarantees, pooled investment platforms or enhanced Pension Protection Fund backing, to de-risk early participation. Unlocking even a fraction of this capital could transform infrastructure financing and reduce reliance on overseas investors.
The path forward
The discussion made clear that reforming the Green Book will only succeed if it is matched by political realism, institutional flexibility and closer alignment between public and private value. Participants agreed
that the forthcoming Treasury guidance must go beyond technical adjustments to reshape how the UK defines and measures value in public investment.
Reforms also need to recognise that appraisal cannot be insulated from politics. Investment choices inevitably reflect strategic priorities, and appraisal should be transparent about that reality rather than pretending to operate in a vacuum Aligning public and private investment logic will be equally important A shared framework for assessing risk, reward and impact could help convert public value objectives into investable propositions, unlocking private and institutional capital to complement constrained public budgets
Finally, devolution and coordination must advance together. Place-based models offer real promise but will fail if departmental silos, multiple sign-offs and fragmented budgets persist. Linking programmes and recognising the national benefits of regional infrastructure will be vital.
Taken together, these shifts point towards a new investment culture, one that values strategic intent as much as economic precision and views growth, distribution and partnership as interconnected goals within a single national appraisal framework
About us
Bradshaw Advisory helps clients solve public policy challenges by bringing together a team of senior experts in economics, data, policy and public affairs Our consultancy was born out of frustration with the high-volume, low-impact and shallow work that too many in our industry provide
Our team is made up of genuine experts who have frontline experience working at the highest levels of government and business As former directors of corporate affairs, special advisers, regulators and government economists we understand how decisions are made, who makes the decisions and how to navigate and influence the policy-making process
RIA champions a dynamic UK rail supply sector. We help to grow a sustainable and high-performing railway as well as promoting UK rail expertise and products to international markets. RIA has over 450 companies in membership, which is active across the whole of railway supply, covering a diverse range of products and services and including both multinational companies and SMEs (60% by number).
The rail industry is a foundation sector for the UK’s economy which supports sustainable investment and jobs in towns and communities across the UK The sector contributes more than £41 billion in economic growth and £14 billion in tax revenue each year, as well as employing 640,000 people It is also a vital industry for the UK’s economic recovery, supporting green investment and hubs in towns and communities across the UK; for every £1 spent on rail, £2 50 is generated in the wider economy