Why the new public spending category PDEL is welcome and could make a lasting impact, Heather Stewart argues

A new focus on prevention

John Healey’s first budget was not a major event, but it may be remembered for introducing PDEL, short for Preventative Departmental Expenditure Limit. The proposed category would reserve budget money for policies intended to prevent problems. The Treasury is preparing for a spending review next year that the Institute for Fiscal Studies has described as “brutal.” Ringfencing preventive policies would mark a change from the usual way government spending decisions are made.

Benefits can cross departments

Some social challenges affect several parts of government, making the returns on prevention difficult to capture in one budget. Spending on Family Hubs, for instance, may produce savings years later in welfare, health or criminal justice.

Demos chief executive Polly Curtis said governments had long endorsed prevention, but that spending systems had rewarded responding to crises instead. She said the system had not consistently rewarded efforts to stop those problems from arising.

Evidence and unanswered questions

The way spending is classified can shape public debate and understanding. Separating resource and capital spending, known as RDEL and CDEL, helped establish the rule that borrowing could fund investment while taxes should cover current spending.

Nuffield Foundation chief executive Gavin Kelly says better data now supports closer consideration of preventive spending. He points to Institute for Fiscal Studies research on Sure Start centres, which found gains in children’s education and later wages, as well as fewer hospital admissions.

Healey gave few details on how PDEL would work. The Treasury says departments will need to make the case for individual projects, and says extending the definition of investment for fiscal rules is not planned; meanwhile, next year’s spending review looks exceptionally difficult on the budget figures.