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

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...