A Preventative Spending Ringfence Could Reshape UK Government, or Spark New Budget Battles

It took one paragraph in a 166-page budget document, and barely a mention in John Healey's speech. But some people who study how Britain spends its money believe that paragraph could change not just public spending but the way government itself works. The subject is long-term outcomes, and the mechanism is a ringfence.

The principle is simple. Any spending judged to be preventative, meaning the upfront cost will be more than repaid by future savings, will now be protected from being raided to meet more immediate needs. The new device carries the usual Whitehall jargon: a preventative departmental expenditure limit, or PDEL. It will apply from the next spending review, which begins next year.

The idea answers a long-running habit. Long-term spending has repeatedly been pillaged to plug day-to-day gaps, and that was especially true during and after the austerity of the 2010 coalition government. That period saw many prevention-based services cut back, Sure Start, the programme for families with young children, among them.

Stuart Hoddinott of the Institute for Government, the thinktank that had called for such a system, said it could become a major change in how the government runs spending reviews and the whole spending framework. Treasury officials agree; one called it an important reform.

Past that point, clarity runs out. The budget document offers one example of what would qualify: Andy Burnham's new spending to prevent rough sleeping. Public health programmes aimed at stopping future illness and Sure Start-style early years schemes also look likely candidates. Beyond these, nobody yet knows what will count. Departments say they are waiting for Treasury guidance, which has not been drawn up. Hoddinott warned that the definition matters enormously: it sounds simple, but you could argue that almost any spending is preventative. Government officials concede the point. One noted that the Ministry of Defence could, in theory, claim all its spending as preventive, given the obvious cost to a country of fighting a war, let alone losing one.

That opens the prospect of a new strand in the endless spending-review tussles between departments and the Treasury, as ministers try to shield their pet projects from future raids.

The symbolism may matter as much as the mechanics. Some governments elsewhere protect particular preventative budgets, public health for example, but this is believed to be the first to adopt the approach as a blanket policy. Officials describe it as part of a wider push under Burnham to tackle knotty, neglected problems with long-term costs, including rough sleeping and adult social care. One official said departments have too often raided these budgets to pay for short-term measures, and that the change is an attempt to counter that as part of a broader effort to transform how the state operates.

Those who work on long-term public benefit are cautiously pleased. Greg Fell, Sheffield city council's director of public health and president of the Association of Directors of Public Health, said it feels like a really good thing. He raised open questions: whether the aim is preventing future acute demand or creating conditions for communities to thrive, which call for different mindsets, and the fact that some spending may take decades to pay off. As a country, he said, we have never been very good at this, so it is up to everyone to make it work.

The test comes with the spending review next year, and with the Treasury guidance that will decide what is in and what is out.