Source · Select Committees · Public Accounts Committee
Recommendation 15
15
Accepted
HM Treasury implements multi-year settlements to incentivise upstream prevention spending.
Recommendation
HM Treasury told us how the shift to prevention takes time and needed to be done gradually.39 We challenged HM Treasury and MHCLG on how the spending review and local government finance settlement would support this shift and incentivise prevention.40 HM Treasury told us that spend was not the only way to incentivise prevention, but that regulation and tax played an important role - such as regulation on smoking and the soft drinks levy. HM Treasury highlighted three aspects of the spending review that are designed to shift spending from “downstream to upstream prevention”. First, the introduction of multi-year settlements to invest upfront; second, a focus on policies for prevention which will pay dividends in future years; and third, investing upfront to shift to prevention which can save money in later years of the spending review.41
Government Response Summary
The government states the recommendation is already implemented, detailing existing commitments from the 2025 Spending Review, including investments in children’s social care, the Crisis and Resilience Fund, homelessness, and community help partnerships to support a shift towards prevention.
Government Response
Accepted
HM Government
Accepted
3.1 The government agrees with the Committee’s recommendation. Recommendation implemented 3.2 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. 3.3 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. 3.4 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. 3.5 The government will set out further detail on its approach at the provisional Local Government Finance Settlement.