Chancellor John Healey's debut budget marked the addition of the Preventative Departmental Expenditure Limit (PDEL). The Institute for Fiscal Studies has said next year's spending review will be brutal. Demos highlights early mental health support as one area for preventive spending.
PDEL will have its own place alongside RDEL, for day-to-day resource spending, and CDEL, for investment, in Treasury documents. Savings from preventive spending such as Family Hubs may emerge years later and across several departments.
The impetus for PDEL 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 argue that spending more upfront is worthwhile.
Thinktank Demos, which introduced the idea in a 2023 paper, identified £22bn in government costs it argued could have been averted by preventive programmes. Demos chief executive Polly Curtis said: 'For decades, governments have talked about the importance of prevention, but the system has consistently rewarded spending on dealing with crises rather than stopping them from happening in the first place.'
Gavin Kelly, chief executive of the Nuffield Foundation, pointed to a series of IFS studies that showed Labour's Sure Start centres boosted children's education performance, increased future wages and reduced hospital admissions. 'Over the last decade, we've become more able to forensically link datasets across different aspects of services, illuminating how decisions in one public service can go on to impact other services and outcomes,' Kelly said.
Healey offered few details on how PDEL will be defined, but the Treasury says departments will have to make the case for individual projects to be considered preventive. Alan Milburn appears poised to make a similar argument in his upcoming review into young people not in education, employment or training, saying money spent now on employment support could potentially save future costs on welfare, health and housing.
The article notes that while PDEL could shift the debate about public spending, the IFS estimates the government faces £27bn in spending pressures, and that no amount of accounting tweaks can disguise the difficulty of the upcoming spending review.
Analysis
Why This Matters
- PDEL creates a formal mechanism to protect early-intervention spending, potentially shifting how governments evaluate long-term cost savings.
- The category could alter behaviour in Whitehall by encouraging departments to consider cross-departmental benefits rather than siloed budgets.
- The success of PDEL will be tested in the next spending review, which the IFS warns will be extremely tight.
Background
UK governments have historically struggled to prioritise preventive spending because savings often accrue to different departments and budgets years later. In 1997, Gordon Brown separated day-to-day spending (RDEL) from capital investment (CDEL), a distinction that allowed borrowing for investment. PDEL is a similar structural change, aimed at protecting spending that reduces long-term costs even if it does not meet the definition of capital investment under fiscal rules.
Key Perspectives
Demos: The thinktank that proposed PDEL argues it addresses a systemic bias: the government rewards crisis management over prevention, and the new category should protect programmes such as early mental health support and obesity prevention.
Institute for Fiscal Studies: The IFS has described the upcoming spending review as 'brutal' and estimates £27bn in spending pressures, casting doubt on how much room PDEL will have to operate.
Nuffield Foundation: Gavin Kelly argues that better data now allows policymakers to link spending decisions to outcomes, making preventive budgeting more feasible than in the past.
What to Watch
- The Treasury's definition of which spending qualifies as preventive, expected to be clarified before the spending review.
- Alan Milburn's review into young people not in education, employment or training, which is likely to test the PDEL framework.
- Whether the government decides to reclassify some PDEL spending as 'investment' for the purposes of fiscal rules, which would allow it to borrow to fund preventive programmes.
Checked
12 claims in this story checked against 1 source: 12 supported.
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- SupportedThe UK budget introduced PDEL as a new public spending category.Business | The Guardian: “PDEL ... marks a welcome, and potentially very consequential, addition.”
- SupportedThe Treasury is prepared to ringfence funding for preventive policies.Business | The Guardian: “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.”
- SupportedJohn Healey’s debut budget marked the addition of PDEL.Business | The Guardian: “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.”
- SupportedThe IFS has said next year’s spending review will be brutal.Business | The Guardian: “The chancellor made clear that ahead of what the Institute for Fiscal Studies (IFS) has said will be a “brutal” spending review next year”
- SupportedDemos highlights early mental health support as an area for preventive spending.Business | The Guardian: “Demos also highlights early mental health support and obesity prevention.”
- SupportedPDEL will have its own place alongside RDEL and CDEL in Treasury documents.Business | The Guardian: “In the Treasury documents that accompany the spending review, and more importantly in the months of wrangling beforehand, PDEL will have its own storyline, alongside RDEL – day-to-day, or “resource” spending for each department, and CDEL – investment.”
- SupportedThe impetus for PDEL came partly from No 10.Business | The Guardian: “The impetus for the move came partly from No 10.”
- SupportedDemos identified £22bn in government costs it argued preventive programmes could have averted.Business | The Guardian: “In a 2023 paper that introduced the idea of PDEL, thinktank Demos identified £22bn of costs to government that it claimed could have been averted by preventive programmes.”
- SupportedPolly Curtis said governments have long discussed prevention, but the system has rewarded crisis spending rather than preventing crises.Business | The Guardian: ““For decades, governments have talked about the importance of prevention, but the system has consistently rewarded spending on dealing with crises rather than stopping them from happening in the first place,” said Demos’s chief executive Polly Curtis.”
- SupportedIFS studies showed Labour’s Sure Start centres boosted children’s education performance, increased future wages and reduced hospital admissions.Business | The Guardian: “He points to a series of IFS studies, funded by Nuffield, which showed Labour’s Sure Start centres boosted children’s education performance, increased their future wages, and even reduced hospital admissions, for example.”
- SupportedGavin Kelly said improved data linking can show how decisions in one public service affect other services and outcomes.Business | The Guardian: ““Over the last decade, we’ve become more able to forensically link datasets across different aspects of services, illuminating how decisions in one public service can go on to impact other services and outcomes.”
- SupportedThe IFS estimates the government faces £27bn in spending pressures.Business | The Guardian: “you can’t ringfence your way out of what the IFS reckons is £27bn-worth of spending pressures.”