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Public Works (Test Discount Rate)

Volume 21: debated on Friday 2 April 1982

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asked the Chancellor of the Exchequer what is the test discount rate used for assessing the projected benefits of public works financed with Government grants; and over what period of time the costs and benefits of such projects are normally assessed.

The basic test discount rate used for assessing the projected costs and benefits of public works is 5 per cent. in real terms, although other rates are used in some circumstances. Costs and benefits are normally assessed over the estimated life of the particular project.