HM Treasury Discount Rate Review

Speaker: Prof Ben Groom

Affiliation: University of Exeter

Location: Room 128, Therapies Building (#84) St Lucia Campus

Zoom: https://uqz.zoom.us/j/82603079317

Abstract: In December 2025 Ben Groom (Exeter) and Mark Freeman (York) were appointed by the HM Treasury UK to undertake an independent review of the social discount rate for use in the economic appraisal of the Government’s regulatory change and investment. The terms of reference were broad, extending to whether market rates or the social rate of time preference would be appropriate, to whether different sectors should have different discount rates, to discount rates for the long time horizons, to whether the government should use regionally specific discount rates. Our review covers all this ground, revisits the Ramsey Rule parameters, estimates uncertainty for long-run declining discount rates and provides guidance on environmental, health and risk related discount rates. The 23 recommendations are presented in a pragmatic way reflecting a principled approach to balancing normative and positive approaches, and the need to communicate complicated ideas in a way that is usable and likely to be deployed. By the time this presentation takes place we will know how many of the 23 recommendations were taken on by HMT, and so the Review can be discussed in this light.