Question to the HM Treasury:

To ask the Chancellor of the Exchequer, with reference to Green Book Supplementary Document: Social discount rates for Cost-Benefit Analysis: A Report for HM Treasury, published 16 November 2020, what assessment he has made of the effect of the proposed changes to social discount rates on (a) productivity of the economy and (b) other key economic factors.

The Green Book Social Time Preference Rate (STPR), or discount rate, is applied by all government departments in the formulation of policy appraisal. The rate has been set at 3.5% since 2003 and has been regularly reviewed by independent academic experts. There are no proposed changes to this headline discount rate, which will continue to be regularly reviewed in line with the evolution of appropriate evidence.

As part of the Green Book Review 2020, we have committed to an expert review into the application of the discount rate for environmental impacts. This will scrutinise the current guidance on environmental valuation and discounting and investigate the case for using the same discount rate as currently applied to the valuation of life and health effects. We have no proposals for changes to this rate at present.

The paper referenced, “Social discount rates for Cost-Benefit Analysis: A Report for HM Treasury”, was originally published in 2018. As noted in the paper, the views displayed in this document are those of the authors and do not reflect those of HM Treasury.