This guide reflects MCC Economics’ work developing and appraising business cases for public bodies. MCC has advised regulators and government departments including Ofgem, the Civil Aviation Authority and the UK government on economic appraisal, price controls and consultation analysis, and this guide draws directly on His Majesty’s Treasury’s Green Book and the published prospectuses of the funds it describes. It reflects those funds as they stood at publication in November 2021.
Because public spending is scrutinised, and a proposal built on a standard method is easier to defend when the scrutiny comes. The National Audit Office exists to scrutinise public spending and carry out value-for-money audits into how public policy is administered, so departments need proposals that stand up to that examination. The Green Book is the Treasury’s guidance on how to appraise policies, programmes and projects, and at its centre sits the Five Case Model, which the Green Book describes as the required framework for considering the use of public resources, applied proportionately to the costs and risks involved.
The effort should match the proposal: the Green Book asks for detail in proportion to complexity, scale and significance, and the Towns Fund business case template includes a tool for judging it. The model is used to prepare a range of documents, including programme business cases, the three-stage project sequence of strategic outline case, outline business case and final business case, business justification cases, and policies and strategies, as set out in the Treasury’s guide to developing the project business case. It has been the required standard for government business cases since the early 2000s, and it has travelled: the New Zealand Treasury built its Better Business Cases framework on it, the States of Guernsey adopted it, and the G20 drew on it for infrastructure schemes.
Five perspectives on one proposal. The Green Book says they must be developed together, in rounds, because each depends on the others. The Green Book calls the model a universal thinking framework that, applied correctly, accommodates the widely varied features of any investment or spending proposal. The table below summarises the five, and each is explained beneath it.
Table 1: The Five Case Model at a glance: the question each case answers and what it covers.
The Strategic Case sets out the rationale for the proposed change and supports it by linking to the relevant national, regional and local strategies, policies and targets. It sets the vision and defines SMART objectives, specific, measurable, attainable, realistic and time-bound, which steer the other four cases, particularly the options and appraisal work in the Economic Case. It must show a clear understanding of what happens if current circumstances simply continue, known as business as usual, and the resulting need for change, along with the benefits, risks, dependencies and constraints of both paths. Stakeholder views belong here too, including any public consultations, research or engagement carried out before the proposal took shape.
The Economic Case identifies the proposal that delivers the best public and social value. Guided by the Strategic Case, it first considers options succinctly in a long list, then refines them to a short list that should include business as usual, a do-minimum option, and the preferred option. The appraisal then puts numbers on the benefits and costs of each option, using a formal method such as cost benefit analysis or cost effectiveness analysis; benefits that genuinely cannot be quantified are assessed in words. Because this forms the core of the proposition, it is scrutinised hard. Modelling must examine deadweight, benefits that would have happened anyway; displacement, benefits merely moved from somewhere else; and double counting. Optimism bias, the tendency to overstate benefits and understate costs and timescales, is addressed using Treasury guidance built on research by Mott MacDonald into large public procurement. Where options affect different parts of society differently, a distributional analysis is included. Value for money is assessed with a sensitivity analysis that stress-tests the key assumptions, drawing on frameworks such as the Department for Transport’s value for money framework and the Treasury’s managing public money guidance. The preferred option is typically the one with the highest net present value or the most favourable benefit cost ratio, though significant unquantifiable factors can justify choosing another.
With the best-value option established, the Financial Case asks whether it can be paid for. It sets out the projected financial costs, revenues and funding sources that will support the project through implementation and its ensuing lifespan, with every assumption outlined and evidenced where possible, and contingencies in place should circumstances change. It should also set out the expected and potential financial risks, with detailed mitigation plans. Metrolinx, the Canadian transport agency, publishes guidance showing the financial analysis required at each stage of a business case.
The Commercial Case presents the commercial feasibility of the preferred option: how the procurement strategy, contractual requirements and key risks can be structured to deliver the best value. It should demonstrate a clear understanding of the services, products, outputs and milestones required, and address the risk transfer strategy between the organisation putting the proposal forward and the providers engaged to deliver it. Good-practice guidance is available in the resources created for the Towns Fund.
The Management Case sets out the delivery, monitoring and evaluation arrangements: the governance structure with key roles and responsibilities, the programme and timeline, and the approach to managing the project. Key stakeholders are identified with an engagement strategy, project interdependencies and management risks are considered, and a short summary of the benefits realisation plan and the monitoring and evaluation plan is included.
The major competitive funds of recent years all require business cases built on it, so the model matters well beyond Whitehall. The table shows the funds as they stood at this guide’s publication in November 2021, with the detail beneath.
Table 2: UK funding programmes requiring Five Case Model business cases, size and status as at November 2021.
The Towns Fund economically challenged English towns, funding urban regeneration, planning and land use, skills and enterprise infrastructure, and transport and digital connectivity. It provides 3.6 billion pounds, with up to 25 million pounds available per town. The challenges it targets include an ageing population without the skills to attract new firms, fewer people going to and returning from higher education, fewer economic opportunities in the surrounding region, and less direct foreign investment than cities receive, compounded where transport and digital connectivity are poor. One hundred and one towns were invited to develop proposals, none in Northern Ireland, and 45 had funding confirmed at the March 2021 Budget. Town Deals run in two phases: first a Town Investment Plan setting out the area’s assets, opportunities and challenges, then fully costed business cases for each agreed project, covering all elements of the Five Case Model, robust enough to pass local assurance.
The Future High Streets Fund, established in 2018 to renew town centres and high streets, in the prospectus's words, put its investment into physical infrastructure, land acquisition and assembly including for new housing and workspaces, transport access and circulation, supporting changes of use including housing densification, and helping high streets adapt to changing technology, as set out in its prospectus. The final allocations of 576 million pounds were announced in May 2021, closing the fund. Its assessment ran in two phases: first defining the area, its challenges and the strategic vision, then, for shortlisted areas, full business case development using the Five Case Model under Treasury and departmental guidance.
Established in 2021, the Levelling Up Fund brings together the Department for Transport, the housing and communities ministry and the Treasury to invest 4.8 billion pounds in high-value local infrastructure across the whole UK. Investment focuses on regeneration and town centres, building on the Towns Fund framework; transport, from public transport and active travel to bridge repairs and road improvements; and culture, maintaining, regenerating or repurposing museums, galleries, visitor attractions and heritage assets, as set out in its prospectus. All bids required the Five Case Model, and transport bids additionally had to comply with the Department for Transport’s transport analysis guidance. The prospectus set aside at least 3 per cent of the 1.7 billion pound first round for Northern Ireland, and 11 of 13 Northern Ireland bids were provisionally agreed, 2.9 per cent of first-round funding. The first-round winners were published in October 2021; one example award was 3.3 million pounds to ESB Innovation UK to upgrade an electric vehicle charging network.
As an EU member the UK received roughly 2.1 billion pounds a year in structural funding for business, employment and agriculture. The Shared Prosperity Fund replaces that source following the UK’s departure, aiming to reduce inequalities between communities across the four nations by raising productivity where economies are furthest behind, with investment in skills, enterprise and employment, and an expected launch in 2022. At publication its allocation process remained unclear, though competitive bidding was suggested as the government’s preferred approach, meaning the authorities that submit the best bids would be rewarded. Ahead of it, the Community Renewal Fund provides 220 million pounds in 2021/22 to help local communities pilot new approaches, addressing challenges that the pandemic may have worsened, from skills and local business support to helping people into employment. It is distributed competitively, with 100 priority places identified on an index of economic resilience, and bids are expected to follow the Green Book and cover all elements of the Five Case Model.
They have moved on, and the table above is preserved as the position at November 2021. The Levelling Up Fund’s second round awarded 2.1 billion pounds to 111 projects in January 2023, a third round followed in November 2023, and the 4.8 billion pound fund is now fully allocated. The Community Renewal Fund closed in December 2023 once its evaluation had been published, having run as the one-year pilot it was designed to be.
The Shared Prosperity Fund launched in April 2022, ran to March 2025, was extended for a transition year, and ended on 31 March 2026. From 1 April 2026 its role passed to the Local Growth Fund and the Pride in Place Programme, announced at the June 2025 Spending Review. New bids now follow the successor programmes, while the Green Book and the Five Case Model continue to govern how the business cases behind them are built.
That a business case is not a document you write once. The Thames Tideway Tunnel, the large multi-year wastewater project under way in London, shows how the five cases are updated repeatedly through a long planning phase as evidence, policy and methods change. The table below tracks its business case documents.
Table 3: How the Thames Tideway Tunnel’s business case evolved, key documents from 2007 to 2015.
The strategic and economic case rested on four grounds, environmental, health, legal and climate, and the benefit and cost analysis was updated at each stage. One update was methodological: income level replaced socio-economic group as the basis for estimating willingness to pay, because the older measure masks income variation and so understates aggregate willingness to pay; the change contributed to the rise in estimated benefits. The lesson is that a multi-year scheme has to keep checking the ground its case was built on, whether regulation, statistics, finances or public opinion, and keep showing that the chosen option passes all five tests as conditions change.
Because these funds are competitive, and the business case is the bid. The government increasingly allocates funding through competition, so the authorities that write the best cases win. So the model has to be done well. A case that links to strategy, appraises its options honestly and shows the project can be afforded, delivered and managed is what separates funded projects from unfunded ones. It is also what survives the audit later. MCC Economics develops and reviews business cases of this kind for public bodies and organisations bidding for public funds.
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