A world-first focus on long-term outcomes could transform UK government – or create new spending fights

Tucked away in John Healey’s budget is decision to ringfence preventative projects where future savings outweigh initial cost

It merited the briefest of mentions in John Healey’s speech and just one paragraph in the 166-page budget document, but some believe it could revolutionise not just public spending but the very process of government itself: a new focus on long-term outcomes.

The idea in the broad sense is very simple. Any spending deemed to be “preventative” – that is, the initial outlay will be more than made up for by future savings – will from now on be ringfenced, meaning it cannot be raided for more immediate needs.

This might sound uncontroversial, but it follows many years of long-term spending being pillaged to plug day-to-day gaps, particularly so during and after the austerity measures of the 2010 coalition government, which slashed numerous prevention-based services, not least the Sure Start programme for families with young children.

But now, starting from the upcoming spending review, which kicks off next year, projects that can be shown to bring down costs in the future will be protected via a new piece of jargon – a preventative departmental expenditure limit, or PDEL.

“It could end up being quite a major change in how the government runs spending reviews, and the entire spending framework,” said Stuart Hoddinott, at the Institute for Government thinktank, which had called for such a system to be implemented. Officials in the Treasury agree, with one calling it an “important reform”.

That is, however, about as straightforward as it gets. The budget document uses Andy Burnham’s new spending to prevent rough sleeping as an example of the sort of thing that would qualify. A few other areas would seem likely: for example, public health programmes to prevent future illness, and Sure Start-type early years schemes.

But beyond that, no one really knows what might or might not qualify for PDEL status. Departments say they are waiting for Treasury guidance, which has not yet been drawn up. “A lot depends on the definition,” Hoddinott said. “While it sounds simple, it becomes quite difficult when you think about how it will work in practice, as you could make any argument that almost all types of spending are preventative.”

Government officials agree, with one making the point that, in theory, the Ministry of Defence could argue all its spending is preventive, given the very obvious costs to the country of fighting a war, let alone losing one.

There is therefore the potential for a new variant of the endless spending-review tussles between departments and the Treasury, as ministers try to protect their pet projects from future plunder.

But what is perhaps just as important is the symbolism. Some other governments around the world protect specific preventative budgets – public health, for example – but this is believed to be the first time one has introduced this as a blanket policy.

Government officials are billing the decision as part of a wider focus under Burnham to try to deal with knotty and neglected issues that have longer-term costs and repercussions, including rough sleeping and adult social care.

One said: “Too often government departments have ended up raiding these types of budgets to fund short-term measures. This is an attempt to combat that as part of a wider push to transform the way the state operates.”

Those whose work revolves around trying to generate long-term benefits to the public are cautiously delighted.

“This does feel like a really good thing,” said Greg Fell, Sheffield city council’s director of public health and the president of the Association of Directors of Public Health.

“There are a lot of questions about how it will work. Is it about preventing future acute demand, or creating the conditions for communities to thrive? Those are different things and they require a different mindset and way of operating. And with some spending, it might take decades to realise the benefits.

“But as a country we have never been very good at this sort of thing, so it’s up to all of us to make sure it works.”