Source · Select Committees · Public Accounts Committee
Recommendation 3
3
Accepted
Provide details on how local government finance settlement will support greater investment in prevention.
Conclusion
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.
Government Response Summary
The government agreed, stating the recommendation was implemented via an HM Treasury letter, and outlined specific investments from Spending Review 2025 to support prevention, including over £500 million for children's social care, £842 million annually for a new Crisis and Resilience Fund, and significant funding for homelessness prevention and affordable homes. Further details will follow in the provisional Local Government Finance Settlement.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Recommendation implemented As outlined in HM Treasury’s Permanent Secretary’s letter to the Committee on 7 August 2025, the government’s approach to public sector reform is informed by a focus on prevention. This will improve outcomes for communities as well as reducing reliance on expensive crisis management. The government is therefore committed to supporting local government to invest in prevention by resetting the government’s relationship with the sector and investing in prevention-focused reform in key service areas. As set out at Spending Review 2025, the government is providing targeted investment in prevention-focused reforms in specific service areas. This includes: • Children’s social care: investing over £500 million from the Transformation Fund over the Spending Review 2025 period to help more children stay with their families. • Crisis and Resilience Fund: providing £842 million a year in the first ever multi-year settlement to transform the Household Support Fund into a new Crisis and Resilience Fund. • Homelessness: providing £39 billion for a new Affordable Homes Programme and £100 million for early interventions to prevent homelessness and £950 million of capital investment for a fourth round of the Local Authority Housing Fund. • Community help partnerships: investing £100 million alongside other spending across government to provide a step-change in the government’s support for adults with complex needs. The government recognises the importance of preventative services in contributing to the financial sustainability of local authorities while improving outcomes for vulnerable people. As noted in the response to recommendation 2, the government is also committed to reducing ringfences and the micromanagement of grants. The government will set out further detail on its approach at the provisional Local Government Finance Settlement.