Recommendation 3

Significant financial pressures are constraining local authorities’ ability to invest in prevention, leading to less early intervention services which could help manage demand. Preventative services can be used to manage demand by helping to stop, delay or reduce the extent of need for statutory services and can help deliver better outcomes. Government has different approaches to encourage spending on prevention, including providing dedicated funding or ringfencing spend within existing funds. However, immediate financial pressures are limiting local authorities’ ability to invest in prevention. For example, local authorities are spending more on late intervention in children’s social care services (£12.1 billion), while the amount invested in early support (£2.8 billion) has gone down at the same time as there are more children entering the care system. Preventative health services have been de-prioritised, with the Public Health Grant falling in real terms by £846 million (20.1%) over the period 2015–16 to 2024–25. We are encouraged that in February 2025, MHCLG confirmed £270 million of new funding for the children’s social care prevention grant. MHCLG has also introduced a ringfence within the Homelessness Prevention Grant for 2025–26. HM Treasury claims that moving to multi-year settlements, reform and targeted investment will support the shift to prevention and save money in later years, although it recognises that this will be a gradual process and take time. 5 RECOMMENDATION Following the spending review in June 2025, HM Treasury should write to the Committee to provide more detail on how the next local government finance settlement will support greater investment in prevention, and how this can be done without just relying on more ringfencing.