Action on prevention - evaluating investment


by Dr Eleanor Roy, CIPFA Health & Social Care Policy Manager

Investment: noun /ɪnˈvest·mənt/: The act of putting money or effort into something not consumed today to make a profit or achieve a result in the future

The very fact that the term ’investment’ is widely used when referring to spending on prevention is a clue in itself to its value. In health, the majority of revenue expenditure, such as day-to-day running costs, meeting demand or delivering projects, is referred to as ‘spending’. 

Preventative spend however, is indeed investment: using resources now to reap benefits in the future. It enables us to avoid future costs, reduce demand, improve financial sustainability and achieve greater benefits from resources that already exist. 

Therefore it is a truth (becoming) universally acknowledged that public spending should take account, not only of the immediate outcomes it delivers, but also of its potential impact on financial sustainability. This is particularly important in preventative investment. While all future costs and benefits of a decision must be considered, perhaps more importantly, the potential impacts of not making said investment must be as well. This is unfortunately not always the case - spending decisions are often taken with an over-emphasis on the short term, instead of considering the broader picture.

CIPFA has partnered with Public Health England (PHE) to develop this vital area. We aim to advance evaluation of preventative investment in public health, and in doing so have drawn on evidence and the knowledge and experience of stakeholders in the field. We are proposing the development of a common, transparent approach to evaluate costs and benefits of preventative investments, to better shine a light on the overall nature of preventative investment in public health across the public sector. 

That’s not say there isn’t already good practice, as well as a range of existing guidance and tools – these are what we have drawn on. Improving the use of these tools in the evaluation of revenue investments in prevention and making their use commonplace could help the sector to:

  • support better decision-making on the use of resources by providing a consistent framework to evaluate the costs and benefits across different organisations
  • bring longer term costs and benefits to light, as these often lack visibility
  • increase transparency and accountability for how resources are currently invested
  • improve incentives to invest in prevention relative to treatment interventions, including where costs and benefits fall upon different agencies.
Using IPSASB guidance and the principles of the Prudential Code to take a comparable approach to revenue investment across all sectors would go a long way towards effectively demonstrating the long-term impacts of preventative investment, or disinvestment. The creation of ratios parallel to those applied in the Prudential Code could provide a means by which the future organisational and whole system costs of failure to invest in preventative action are made more transparent and explicit.  

We must recognise that progress towards this goal will not happen overnight, and the system must adjust to gain the skills and influence to drive change. Part of this will be for finance professionals working in public sector bodies to take on a stronger role in influencing policy and decision-making. 

CIPFA have already emphasised the fundamental importance of the finance profession in any public sector organisation, and their potential to support organisations strategically. The profession holds the financial reins of the business, and needs to ensure that resources are used wisely to provide better outcomes and services for those that depend on the public sector. 

The public sector finance profession can help to empower change. We therefore call on the profession not only to adopt the approach suggested in our report, but also to aid in identifying and shedding light on the way to achieve this ambition. To influence the decision-making process, change the way prevention is considered – as an investment for the future, rather than a way to generate savings - and to properly report it as such across the public sector.

Together, CIPFA and PHE are seeking to improve the evaluation of preventative investments by starting a conversation that leads to new ways of working across systems, and for entire communities. Working closely with stakeholders and experts, we have brought together the tools, resources and ideas that we hope will shift thinking and be a catalyst for change in the near future.

Article originally appeared in the Local Government Chronicle

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