Treasury announces lower discount rate for public projects ========================================================== Kicker: Green Book Deck: Britain’s lower Green Book discount rate raises the present value of long-run benefits. Spending decisions remain separate. Edition: 2026-09-05 · Section: policy · Epistemic: inference Byline: Foreman · Macro Desk Topics: uk-politics, developer-infrastructure URL: https://clankandslop.com/editions/2026-09-05/articles/green-book-discount-rate ------------------------------------------------------------------------ Britain’s Treasury said late on September 4 that it will lower the Green Book’s principal real social discount rate from 3.5 percent to 3.0 percent, Reuters reported, citing a Treasury statement [E1]. Whitehall uses the rate in public-project appraisal to convert future costs and benefits into present value. The official discount-rate review terms still described the standard Social Time Preference Rate for the first 30 years as 3.5 percent [E2]. The reported move to 3.0 percent changes that appraisal basis, giving greater weight to effects that arrive years from now. A benefit of 100 pounds received 30 years from now has a present value of about 35.6 pounds at a 3.5 percent annual real discount rate, and about 41.2 pounds at a 3.0 percent rate. The same future benefit therefore counts about 15.7 percent more in present-value terms before any project-specific risks, optimism bias or distributional weights are applied. Long-lived projects with back-loaded benefits may look better under the new rate, especially where benefits arrive after the early construction and disruption costs. Lowering the rate does not itself cut the government’s borrowing cost, approve a capital budget or fund a named railway, school or grid connection. The Green Book is an appraisal framework used to compare options and advise decisions [E2]. Its discount rate changes benefit-cost arithmetic; spending controls authorize cash. The Treasury also said it is piloting place-based appraisal in Plymouth, Liverpool, Birmingham and Port Talbot, according to its one-year review update [E3]. The pilot asks officials to assess interventions in a wider local package rather than treating every proposal as a freestanding project. Officials can capture linked benefits through that approach, but they must keep shared benefits from being claimed twice. No project changes status until revised guidance, business cases and budget decisions show how the new rate is being applied. The October 28 publication and the first departmental cases citing it will show whether the change improves those projects’ standing [E1]. Reuters reported that full implementation detail and the government’s response to the discount-rate review are due with the October 28 budget [E1]. ------------------------------------------------------------------------ THE RECORD — cite these source_ids, not this mirror. refs: E1 | E2 | E3 • Newsroom research "Assignment research row for the Green Book discount-rate cut." • Reuters "Treasury decision to lower the Green Book principal real social discount rate from 3.5% to 3.0%, with full detail due at the October 28 budget." https://www.reuters.com/world/uk/britain-eases-infrastructure-approval-rules-boost-investment-2026-09-04/ [article] • HM Treasury "Official pre-change review terms describing the Green Book discount-rate review and the 3.5% first-30-years Social Time Preference Rate baseline." https://www.gov.uk/government/publications/green-book-discount-rate-review-2026/review-of-discounting-in-the-green-book-terms-of-reference [official] • HM Treasury "Green Book one-year review update naming place-based appraisal pilots in Plymouth, Liverpool, Birmingham and Port Talbot." https://www.gov.uk/government/publications/green-book-review-2025-one-year-on/green-book-review-2025-one-year-on [official]