The Treasury unveiled the Preventative Departmental Expenditure Limit to operate alongside existing capital and day-to-day resource budgets. This initiative responds to research suggesting that failing to invest early generates tens of billions of pounds in avoidable state expenditure. Departments seeking allocations will be required to submit individual policy cases, including measures such as rough sleeping reduction, to qualify for the ringfenced status. With modern data making it easier to track cross-departmental savings, the framework attempts to fundamentally rebalance public spending away from reactive crisis management.
Key points
Departments must formally prove that specific initiatives will deliver long-term savings…: Departments must formally prove that specific initiatives will deliver long-term savings to secure ringfenced preventative allocations.
Modern tracking capabilities enable policymakers to measure how early spending in one sec…: Modern tracking capabilities enable policymakers to measure how early spending in one sector reduces costs in healthcare, justice, and welfare.
The formal budget classification aims to permanently alter fiscal scrutiny by treating cr…: The formal budget classification aims to permanently alter fiscal scrutiny by treating cross-cutting preventive programmes as an explicit priority.
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John Healey’s debut budget was far from a blockbuster, but it may come to be remembered for the birth of a plucky new character in the tax and spend universe – little PDEL.
It may not have the charm of Disney’s Wall-E, but PDEL (pronounced P-Del), Preventative Departmental Expenditure Limit, to give it its full name, marks a welcome, and potentially very consequential, addition.
The chancellor made clear that ahead of what the Institute for Fiscal Studies (IFS) has said will be a “brutal” spending review next year, the Treasury is prepared to ringfence the budget for preventive policies.
The impetus for the move came partly from No 10. Andy Burnham knows that to achieve some of the missions closest to his heart, such as tackling rough sleeping, he will have to make the argument that it’s worth spending more upfront to save the state in the longer term.
It’s an intuitive idea, yet it’s not how the government tends to think about spending – and it’s certainly not how the Treasury makes decisions.
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