The government will create a new ringfenced category of prevention spending at next year's spending review, in what ministers present as a move away from crisis fire-fighting towards stopping problems before they escalate. Chancellor John Healey aims to save billions of pounds a year by tilting spending towards prevention rather than emergency response, according to reporting in The Observer on 31 October.

The Treasury is creating a new category known as preventative departmental expenditure limit, or PDEL. Budgets for tackling obesity, early years education and rehabilitating offenders are among the pots that could be protected, and cabinet ministers will be forced to ringfence the prevention budgets, meaning they cannot divert the money to cover emergencies in the NHS, schools, the police or prisons.

Why ministers think it will save money

The argument is that spending early costs less than dealing with a crisis later. Treasury analysis cited in the reporting found that the £432 million allocated to tackling rough sleeping would not only get people off the streets but also reduce the significant fiscal cost of each rough sleeper, estimated at about £14,000 a year. The prime minister promised in his first speech to make creating a preventative state a core aim of his premiership.

What is still undecided

The details are not yet settled. The chief secretary to the Treasury, Emma Reynolds, who is in charge of the spending review, will issue departments with guidance about how the new category should be defined and tracked, and the chancellor has ruled out allowing these budgets to be funded by borrowing. The Institute for Government, which has long recommended a prevention ringfence, welcomed the announcement but cautioned that it should not be seen as a silver bullet, and that the next step must be defining what counts as preventative spending.