HM Treasury has cut the Green Book's discount rate, the number behind every project's benefit-cost ratio. HS2's own 'poor value for money' verdict used the old rate in May, and nobody has said if it gets redone.
Estimated reading time: 6 minutes
In short. HM Treasury's Green Book publication page logged an update on 28 October 2026: "Updated to reflect changes to the approach to discounting" [1]. Checked against an archived copy of the prior edition, the change is real and specific: the social time preference rate, the number used to value future benefits against present costs in every central government appraisal, has been cut from 3.50% to 3.00% for a project's first 30 years, and further for later years [2] [3]. HM Treasury says the cut will "strengthen the case for transformational projects" [4]. This site's September teardown found that High Speed Two, the single largest transformational project in the state, was scored "poor value for money" in May 2026 under the rate that just changed, "in accordance with Green Book methodology" [5]. Two documented mistakes: four stars.
The Green Book is tracked on this site because its September teardown found the document's mandatory optimism bias adjustment had been applied to HS2 exactly as written, and had still not caught the scale of the cost overrun it is designed to catch. This update does not touch that finding. It touches the other number that decides whether a project clears the Green Book's bar in the first place.
What changed
HM Treasury commissioned Professors Ben Groom and Mark Freeman in December 2025 to review the Green Book's approach to discounting; they reported in June 2026, and in September 2026 the Chancellor accepted their central recommendation: "to reduce the Green Book discount rate from 3.50% to 3.00% for the first 30 years of a proposal" (para 1.3) [4]. The change reached the live document on 28 October 2026. An archived capture of the Green Book PDF from 30 July 2026 shows the prior wording: "the social time preference rate (STPR)... is set at 3.50% in real terms for years 1 to 30 of an appraisal. It is 3.00% for years 31 to 75, and then 2.50% for year 76 onwards" (para 6.54) [3]. The live document now reads: "It is set at 3.00% in real terms for years 1 to 30 of an appraisal. It is 2.50% for years 31 to 75, and then 2.25% for year 76 onwards" (same para 6.54) [2]. Every band fell by the same 0.50 or 0.25 percentage points Box 1.A of the Treasury's response sets out [4]. A lower discount rate values future benefits more highly relative to upfront costs: exactly the effect the Treasury states it wants.
The claims, tested
| HM Treasury's claim | What we found | Verdict |
|---|---|---|
| Cutting the discount rate "will place greater value on the long-term benefits of investment and strengthen the case for transformational projects that drive growth" (para 1.3) [4] | The Department for Transport's own May 2026 Accounting Officer Assessment scored HS2 Phase 1's 2020 approval 0.3 to 0.4, "poor value for money", under the rate the Treasury has just replaced, "in accordance with Green Book methodology" [5] | The project the new rate is supposed to help is the one this site already found failing under the old rate, and nothing in the Treasury's response, the Green Book, or the review commits anyone to recalculate it |
| On social insurance projects, those delivering high benefits during a crisis, "HM Treasury agrees with the theoretical principle... National resilience is valuable" (para 2.26) [4] | The same response rejects the reviewers' recommended lower discount rate for exactly these projects, "at this stage" (para 2.25), because assessing which projects qualify "would be difficult to assess rigorously" and is "likely to be uncertain, contentious and prone to change" (para 2.27) [4] | The same document accepts other recommendations that require comparably uncertain, contentious, forward-looking judgement, such as commissioning new relative-price forecasts for health and environmental benefits (para 2.8) [4]. Difficulty of assessment is not applied as a consistent bar |
A verdict five months old, under a rate that no longer applies
The Department for Transport's reset Accounting Officer Assessment, published 19 May 2026, states plainly that "the value for money assessment has been conducted in accordance with Green Book methodology and Managing Public Money principles", then adds the sentence this site's September teardown led on: "In the interest of transparency and to enable a comparison of historic BCR trends on a like-for-like basis, if current costs were known at the time of Notice to Proceed (2020), the range would be 0.3-0.4" [5]. That is the Green Book methodology as it stood in May: a 3.50% discount rate for the first 30 years of HS2's multi-decade benefit stream. Five months later, the Treasury has lowered that exact figure to 3.00%, and said the change exists specifically to "strengthen the case for transformational projects that drive growth" [4]. HS2 is not a marginal case of that category; it is the one this site's own teardown used to test the Green Book in the first place. A lower rate values HS2's future decades of passenger benefit more highly against its sunk and committed costs than the 0.3 to 0.4 figure did. Neither the Treasury's response, the published Green Book, nor the Green Book supplementary guidance on discounting says whether, or when, the Department will restate that number, or any other already-published Accounting Officer Assessment, against the new rate [6]. The independent review itself, read in full, does not raise the question either.
A principle conceded, a mechanism refused
The reviewers recommended that projects delivering high social benefit during a crisis, their worked examples cite pandemic preparedness and national resilience, should get a lower discount rate than standard projects, subject to explicit Treasury permission (recommendation R.15) [7]. HM Treasury's response concedes the underlying case in full: "National resilience is valuable, and there is a case for investing in public projects that could deliver high social benefits during negative shocks" (para 2.26) [4]. It then declines to act on it, because identifying which projects qualify "would be difficult to assess rigorously" and such assessments are "likely to be uncertain, contentious and prone to change" (para 2.27) [4]. That standard is not applied evenly across the same document. Responding to a separate recommendation on relative price paths, the Treasury accepts a commitment to "work with other public bodies to develop forecasts for relative prices for health, environment and other types of social benefit", to be published later (para 2.8) [4], work that is forward-looking, contestable and no more rigorous at the point of acceptance than identifying a resilience project would be. Difficulty of assessment reads less like a fixed bar and more like a reason available when the Treasury wants one.
Credit where due
The headline change itself is cleanly done. The live Green Book's own worked example, Table 8, multiplies five years of a hypothetical benefit by a discount factor of 0.8626, the exact value implied by the new 3.00% rate rather than a stale figure left over from 3.50% [2]. The publication page's own change log names the update honestly, rather than folding it into a routine-sounding republish [1]. And the Treasury published its reasoning recommendation by recommendation, including the three it rejected and the five it only partly accepted, rather than a single summary line [4]. A government document that shows its working, including the parts it declined to adopt, is doing more than the Green Book's own disclosure standard strictly requires.
Verdict
Four stars, from two documented mistakes. The Treasury changed the one number most likely to move HS2's own benefit-cost ratio, said the change exists to help projects like it, and left the question of whether HS2 gets recalculated entirely open. And it granted itself, on a case-by-case basis it chose not to define, the same discretion over "difficult to assess" judgement calls that it exercised to reject the one recommendation that would have constrained how discounting is used for resilience spending.
The star score counts two documented mistakes: the Treasury's own stated rationale for the discount rate cut, to strengthen the case for transformational projects, sits against total silence on whether the already-published HS2 verdict gets recalculated under it; and the rejection of a lower discount rate for social insurance projects, on grounds of assessment difficulty, sits against the acceptance of a comparably judgement-heavy recommendation elsewhere in the same response. Two falls in the 1 to 3 band: four stars; the bands are on the ratings page. The discount rate change itself, and the worked example updated to match it, were checked and found correctly and transparently implemented, and are credited rather than counted. Analysis is of the Green Book as served from GOV.UK on 29 October 2026, last updated 28 October 2026. The document is tracked in the Daily Register; a further revision will get a diff entry.
Sources
- HM Treasury / GOV.UK, "The Green Book" (publication page, checked live 29 October 2026, last updated 28 October 2026, change note: "Updated to reflect changes to the approach to discounting"). https://www.gov.uk/government/publications/the-green-book-appraisal-and-evaluation-in-central-government
- HM Treasury, "The Green Book" (2026 edition, reissued October 2026, PDF, 86pp). https://assets.publishing.service.gov.uk/media/6ae0ba897b7111c482d80a3b/The_Green_Book_2026.pdf
- Wayback Machine capture, 30 July 2026, of the prior Green Book PDF (same publication, pre-revision text, para 6.54 reading 3.50%/3.00%/2.50%). https://web.archive.org/web/20260730044749/https://assets.publishing.service.gov.uk/media/698dbcd17da91680ad7f4308/The_Green_Book_2026.pdf
- HM Treasury, "Green Book Discount Rate Review 2026: HM Treasury response" (October 2026, PDF, 19pp). https://assets.publishing.service.gov.uk/media/6ae0b3a97cf9b2248904678e/Green_Book_Discount_Rate_Review_2026_-_HM_Treasury_response.pdf
- Department for Transport, "High Speed 2 (HS2) Phase 1: decision to continue delivery following programme reset, Accounting Officer Assessment summary" (19 May 2026, checked live 29 October 2026). https://www.gov.uk/government/publications/department-for-transports-accounting-officer-assessment-summaries-for-the-government-major-projects-portfolio/high-speed-2-hs2-phase-1-decision-to-continue-delivery-following-programme-reset-accounting-officer-assessment-summary-may-2026
- HM Treasury, "Green Book supplementary guidance: discounting" (publication page, last updated 28 October 2026). https://www.gov.uk/government/publications/green-book-supplementary-guidance-discounting
- Mark Freeman and Ben Groom, "Findings and Recommendations: Green Book Discount Rate Review" (HM Treasury, June 2026, PDF). https://assets.publishing.service.gov.uk/media/6a43915e7ac6fd9c6a94abbe/Findings_and_Recommendations_-_Green_Book_Discount_Rate_Review.pdf