UK: Could Preventative Spending Help Cure The Impact Of Public Sector Spending Cuts?

Last Updated: 11 March 2011
Article by Carron Rand

A look at the Finance Committee's Report on their inquiry into preventative spending

In its first Report of 2011, the Finance Committee of the Scottish Parliament considered the advantages that preventative public spending might offer. The Committee undertook to consider how public spending can be best focussed over the longer term on trying to prevent, rather than simply deal with, negative social outcomes. Meanwhile, Graham Allen, MP, has also carried out similar research south of the Border. His studies concentrated on one particular area of preventative spending, and have been recently presented in the UK government-commissioned report, "Early Intervention: The Next Steps".

The idea that "prevention is better than a cure" is certainly not a new one. However, the unanimous support expressed within these Reports suggests that if this old idea can be put into practice in the context of public sector spending, it might just provide the innovation and change required to protect services across Scotland's communities.

A challenging environment

The Finance Committee's inquiry stemmed from their earlier Report, published last year (June 2010), which examined how the public sector was preparing for a period of "tightening public expenditure". Just one month later, the Independent Budget Review Panel (IBRP) reported on what they considered to be the most challenging public spending environment since the Second World War. More recently, news headlines have been dominated by details of the budgetary cuts faced by local authorities and public bodies across the UK.

However, in addition to the current series of cuts, there are other factors contributing to the challenging environment public bodies are operating within. Witnesses to the inquiry identified a number of contributory factors. COSLA outlined the findings of a sophisticated financial model developed to map out expected expenditure over the next six year period, incorporating demographic change and other changes in service demand. Highlighting the growth in demand, the model shows that, even if there was no anticipated decrease in future resources, it would still be very difficult to continue with the current level of service investment due to the increased growth in demand. Furthermore, there will be no increase in resources going forward, marking a significant change for the Scottish Parliament which had become accustomed to an annually growing budget over the past 10 years. The IBRP's Report cited figures from the Scottish Government that suggests it could be as long as 15 years before the budget will return in real terms to 2009 – 2010 levels.

The public sector is not only challenged by the financial factors restricting funds available to it, but also by the enormous scale of issues it requires to address. A particularly difficult set of such issues are those referred to within the Report as "negative social outcomes". To outline the nature of the severe and deeply entrenched problems in Scotland, the Report includes various examples, including: one quarter of inmates in Scotland's prisons have been in care; Scotland performed badly in terms of drunkenness, obesity, teenage pregnancy and violent crime compared to other countries; and, a joint report by Action for Children and the New Economics Foundation claimed that the economic cost of addressing problems such as crime, mental ill health, family breakdown, drug abuse and obesity would be almost £4 trillion over a 20 year period.

With statutory duties to comply with, negative social outcomes to tackle and spending cuts to manage, there is little wonder that the public sector is searching for a new way to provide Scotland with services. Several witnesses to the inquiry spoke of the need for a radically new approach to public spending and, indeed, a striking feature of the inquiry was that all witnesses supported the concept of preventative spending as, perhaps, the primary way to improve negative social outcomes evident across Scotland.

Is prevention better than a cure?

The Committee did not define the term "preventative spending" in their call for evidence. From the wide ranging policy areas referred to in written evidence – including the early years, climate change and health and social care, and more specific areas such as mediation, fire prevention and smoking – the Committee only heard oral evidence on those areas that had arisen most frequently. Accordingly, the main issues for consideration by the Committee were the early years, health and social care.

In its Report, the Committee explained that "[i]n the simplest terms early interventions aim to provide support for children, including through their families, at as early a stage in their lives as possible, including pre-birth. Such interventions...can significantly help to prevent or reduce the likelihood of children developing future social problems that may otherwise have necessitated an intervention by the state." Early intervention clearly provides a potential for significant savings, but witnesses also emphasised the benefits this approach would bring to reducing negative social outcomes by helping children, their families and society as a whole. Alan Sinclair of the Centre for Confidence and Well-being told the Committee that "[b]y investing in early years we have a route to ending or at least reducing a series of intractable problems: the long tail of school failure; heath inequalities; alcohol and drug abuse; violence in our community and so many people being excluded from work."

The Committee was persuaded by the evidence with which it was presented and recognised that a preventative spending approach to the early years could allow the public sector to make significant savings, take steps to eliminate existing negative social outcomes and also endeavour to prevent such outcomes from arising in the future. In light of this, the Committee welcomed the work undertaken by the Scottish Government so far, in launching The Early Years Framework in December 2008. However, in highlighting their concern at the very little mention or discussion of the EYF in evidence, the Committee agreed with a number of witnesses who acknowledged the wealth of evidence in this area and called for a shift of focus onto the implementation of the early years policy.

Throughout the inquiry it became clear that a preventative approach to public sector spending on early years would bring benefits that would filter through to further areas, including health and social care. Furthermore specific examples of the success of preventative spending in these areas were cited, for example health visitors. However, in other health-related services, some witnesses warned that "there may not yet be programmes proven to have an impact" and reported their difficulties in measuring the success of implementation. As such, it seems further work may still be required to, firstly, establish where preventative spending can best be directed, and secondly, to ensure that service providers are aware of such findings.

Whilst the evidence of the potential benefits that preventative spending, generally, could bring, was plentiful, those presenting such evidence made no secret of the fact that neither results nor savings should be expected overnight. Furthermore numerous concerns were raised regarding the difficulty in measuring progress. COSLA referred to a study carried out by academics from York University in 2007, which explained that "[t]he longer-term case for prevention...has to be made on the basis of outcomes and not savings – and if cost savings do result, they may well benefit other agencies rather than those offering prevention. In the immediate future a shift to preventative services will almost certainly cost money."

Despite this cost, the evidence referred to within the Report suggests that action is required immediately. In arguing for a radical transformation towards preventative spending, COSLA was clear that resources must be redirected to complete a shift from reactive services to preventative services. They advised that in doing so, the need for reactive services will be diminished. COSLA clearly had the statutory duties of its members in mind when it cited the rationale for this change to be "mainly" about "improving individual lives and personal outcomes", although it also recognised the "growing evidence base which suggests that moving towards early intervention and prevention could also be economical."

It seems then that witnesses to the inquiry and the Committee itself were persuaded that preventative spending would allow a better use of the public resource that, according to strategic objectives underpinning public sector reform, exists to create a Scotland that is "wealthier and fairer; smarter; healthier; safer and stronger; and greener". However, whether this bold and radical approach can be put into practice, and whether that practice would help to address the impact of public sector spending cuts is less clear.

Can preventative spending be put into practice successfully?

Following consideration of the benefits that preventative spending could bring, the Committee also considered the barriers standing in the way of implementation. They were presented with issues that would cause difficulties to specific areas and others that would stand in the way of a more general shift to public sector preventative spending across various services.

Perhaps the most obvious difficulty facing any such transition in approach to spending is the significant series of "disinvestments" that would require to be made before "reinvestments" could be put in place. For example, freeing resources which are "locked up" in acute care and hospital provision present real difficulties for those providing health and social care services. However, this issue, which COSLA termed the "chicken-and-egg element", would no doubt cause problems in numerous areas. The Committee recognised that the results of preventative spending would not be immediate, and logically then, it also appreciated the concern raised by witnesses that an investment in preventative spending would not mean reactive budgets could be immediately cut. As such, there would be a requirement for dual funding. At a time when public resources are under immense pressure, this would seem to be a difficult barrier to break through. However, in order to do so, COSLA has called for a new model that would allow the redirection of resources within individual public sector organisations, between public sector organisations and at government level.

Whether such a redirection of resources is possible in the current climate of spending cuts is a key issue. The tension between spending cuts and dual funding is clear. However, further subtle conflicts also exist. The Committee highlighted the success of a universalistic approach to preventative spending, and called for the Government to state whether it has any future plans to roll out preventative programmes on a universal basis. In light of the Report by the IBRP, it seems unlikely that any such plans will be forthcoming. The IBRP noted that while the principle of universality is "commendable", it may no longer be affordable, suggesting that a "debate needs to be had on whether those who can afford to pay might be invited to do so". But in response to these conflicts, those witnesses arguing in favour of preventative spending encouraged the Committee to see the budget cuts as an opportunity to reform and consider such new approaches to spending with the longer term view in mind.

Evidence presented to the Committee made it clear that should a shift to preventative spending be undertaken, it would require significant reform to the structure of the public sector. The Committee reports on "fundamental criticisms of the way that the Scottish public sector is organised", in that it seeks to react to and manage social problems instead of preventing them. Furthermore, witnesses criticised the fact that public sector bodies often fail to work together to tackle such problems, and cited the sense of ownership over budgets as an issue standing in the way of preventative spending. However, in defence, the Association of Directors of Social Work told the inquiry that services are delivered "according to current statutory frameworks and sets of guidance that are laid down by Government in legislation and so on..".

The nature of government and the political cycle was identified as a further barrier to a move to preventative spending. Governments often lack the incentive to commit to policies providing long term benefits. However, in providing evidence to the Committee, the Scottish Government certainly showed their support to preventative spending and went so far as to present ways to break through existing barriers, including the need to identify "the appropriate mix of policies and interventions" to address issues arising in the short term, and provide for long term benefits.

The Government recognised in their evidence that it is "perhaps understandable" that the main priority for parts of the public sector is their statutory obligations, and in order to meet those, "scarce resources" must be focused accordingly. Despite the support shown by the Government and other witnesses to the inquiry, whilst these barriers are in place and statutory obligations require to be fulfilled, it may be too difficult for the public sector to make the shift in spending approach that so many would like see.

In his report, Graham Allen MP suggested that private investors should be encouraged to fund early intervention programmes and then invited to enjoy a "slice of [the] profit" saved from preventing a child from "going off the rails". This is in stark contrast to the recommendations of the Committee that suggest further investment from the Scottish Government. Whilst the idea is an interesting one, it is unlikely to break through the barriers to preventative public sector spending in Scotland completely. Allen identifies the need for such early intevention programmes to be "really rock solid and really provable"; whilst he has worked on this point in his focused report, the Committee heard that such proof is hard to establish across a number of service areas. Furthermore, the idea of a making a "profit" from such programmes is likely to be considered – at best – an ambitious idea, particularly in a climate where any savings are a 'must' and not a 'bonus'. Nevertheless, perhaps this idea will be given further consideration. The Committee, Scottish Government, other parliamentary committees and those who contributed to the inquiry, will continue to discuss the Committee's Report, the Scottish Government's response and how the barriers can be broken down to establish whether or not preventative spending can be put into practice in Scotland's public sector.


In light of the evidence to the Committee, it is clear that many believe that investing in the prevention of the negative social outcomes that plague Scotland would, indeed, be better than investing in services that may, or may not, cure them, particularly, in such difficult financial times. However, how to make the jump from reactive spending to preventative spending will require more consideration, and more funding too. No doubt witnesses to the inquiry will welcome the opportunity to discuss these issues further and challenge decision makers to implement preventative spending. It remains to be seen whether the decision makers will be persuaded to make the "leap of faith" towards preventative spending, and perhaps, more importantly, whether there will be funds to allow them to do so.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.