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Buy now, save later: the big win for preventative policy in the Autumn Budget
Tucked among the Chancellor’s commitments was an announcement that the Government will establish a new funding stream designed to give greater weight to preventative policies.
Currently, departmental spending limits are divided between capital funding (CDEL) – intended for long-term investment in assets such as major infrastructure – and revenue funding (RDEL), which covers day-to-day spending. John Healey’s first Budget as Chancellor has now introduced a third category: preventative departmental expenditure limits, or PDEL.
Coming into effect at the 2027 Spending Review, PDEL is intended to create a clearer incentive for departments to invest in prevention – effectively ringfencing funding to fix the roof while the sun is shining.
The tension between capital and revenue spending has historically created messy incentives. Departments have at times raided capital budgets to plug gaps in day-to-day spending, effectively cannibalising long-term investment to manage immediate pressures. This has been particularly problematic in the Department of Health and Social Care: between 2014-15 and 2018-19, more than £4 billion was transferred out of its capital budget to cover shortfalls in revenue spending.
The Government banned this practice in December 2024. But in doing so, it exposed another gap: what happens to policies that invest in the future but do not qualify as capital spending? That might include investment in youth services to prevent future anti-social behaviour, or cardiovascular prevention programmes designed to reduce heart attacks further down the line.
This was the problem identified by Demos and the Health Foundation in 2023, when they first proposed PDEL. Their argument highlighted two principal benefits of a separate funding stream for prevention. It would protect funding for preventative policies, while also allowing departments to track whether investment in prevention actually delivers the expected return. Three years later, that proposal has now become Government policy.
Although the original case for PDEL was developed with health in mind, its potential extends well beyond DHSC. Almost every department faces a similar challenge on whether to spend money now on interventions that could reduce downstream pressures.
So, what does this mean for policymaking?
For years, people and organisations seeking to influence Government have been warned that ‘invest to save’ arguments may fall on deaf ears. Investing £1 today to save £4 in future may be economically compelling, but it carries less weight for departments under pressure to deliver in-year savings. With PDEL, that could all begin to change.
There is still plenty we do not know, including how much funding will ultimately sit within PDEL and how departments will be expected to demonstrate that spending genuinely qualifies as preventative. But, with the right evidence base, policies that can credibly demonstrate future savings or reduced demand may have a stronger route into departmental spending decisions.
One thing is clear. From next year’s Spending Review, prevention is firmly back on the table.