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The Imperial Treasury: appraisal methodology and regional economic performance in the UK

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Diane Coyle & Marianne Sensier [1]

Conference version: under submission

ABSTRACT

The disparity between the least and most productive regions in the UK is extreme by the standards of most other OECD economies. While there are many contributory factors, this paper argues that an important one is the concentration of public investment in and around London and the South East. The appraisal process for infrastructure investment projects follows the procedures set out in the Treasury’s Green Book, with major funding allocation decisions almost wholly centralised. In this paper we argue that the official methodology has reinforced the regional imbalance of the UK economy; that recent changes to the appraisal methods are welcome but unlikely to redress the London bias in infrastructure decisions; and that although evidence-based appraisal is important, infrastructure investments also need to be based on a strategic view about economic development for the whole of the UK.

Keywords: Infrastructure; spatial disparities; cost benefit analysis

JEL codes: H54, O18, R11

[1] University of Cambridge and University of Manchester respectively. Contact dc700@cam.ac.uk. Our thanks to Tom Forth, Michael Kenny, Luke Raikes, Ron Martin and participants in conferences at the University of Bath and University of Cambridge for their comments. The authors are of course responsible for any errors or omissions.

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  • About the author

    Professor Diane Coyle, Inaugural Bennett Professor of Public Policy

    Professor Coyle co-directs the Institute with Professor Kenny. She is heading research in the fields of public policy economics, technology, industrial strategy and global inequality.   Learn more

    Diane Coyle 2018