Revenue, capital, prevention: A new public spending framework for the future


Public services have reached a tipping point. Demand outstrips supply. Quality and access are too often unreliable. We only step in once people have reached a potentially avoidable crisis. At the root of these systemic problems is a lack of long-term focus and a failure to effectively plan for the future.

Fiscal frameworks and short-termism give the Treasury and politicians strong incentives to opt for cuts in capital. Between 2013/14 and 2019/20 faced with pressures on day- to-day spending, £3.9 billion was transferred from planned capital spending to meeting NHS running costs. In 2017/18, 18% of the NHS’ capital budget was used to cover shortfalls in day- to-day spending. It is easier to cut investment projects than take unpopular decisions to reduce funding for core public services or increase taxes.

We need a new approach; one which starts by measuring prevention and having a transparent process of budgeting and accounting for prevention spending.

This paper proposes a new category within Department Expenditure Limits: Preventative Departmental Expenditure Limits (PDEL). It would classify and ring fence preventative investment, injecting long-termism into public spending.