The Change Fund (Draft Budget 2015-16)

The Draft Budget 2015-16 announced the creation of a “Change Fund” which will “finance upfront investment in cross-cutting reform initiatives and preventative measures that are expected to generate savings in the longer term.”

Preventative measures are those that aim to reduce the future cost of public services by stopping social problems from occurring or worsening, rather than reacting to them. For example, research has shown that investing in early years of childhood development can bring significant medium- to long-term savings for the public finances, as a result of improved social outcomes such as better employability and educational attainment, and reduced criminal activity.

A summary of the Draft Budget 2015-16 (written by the Centre for Economic Empowerment) can be accessed here.

The Draft Budget 2015-16 allocates £30m for the Change Fund (0.3% of the Executive’s resource budget). It can be useful to set aside money for preventative spending in this way, as the fact that the benefits are gained over the longer-term (and often by multiple government agencies) means that there is a tendency for preventative measures to be underfunded, particularly when budgets are tight.

The Change Fund provides a balance held “at centre” (that is, not initially allocated to individual departments) that is maintained by DFP and assigned to costed projects that can realistically meet a set of assessment criteria. Departments therefore benefit from being able to access an external funding source to build transformative programmes without restricting their own budgets.

To be able to access the Change Fund for specific projects departments will have to meet one (and preferably more) of the following criteria:

  • The project is reform-orientated and innovative,
  • Includes collaboration between government departments and their agencies with the private, community and voluntary sectors.
  • Takes a preventative approach in targeting problem causes.

Additionally, these projects will be required to improve public service delivery and be achievable in the draft budget period.

While the public sector may be in need of innovative solutions to providing services in times of restraint, £30m may be an initial balance that could be increased in future years if early indications are that the scheme is successful, and the associated savings would be greater if more initiatives are able to take advantage. Being able to evaluate and sustain successful projects would be of benefit to the future life of the Change Fund.

A further point to add is that the plans, included in the Draft Budget, for restructuring the public sector workforce are to be funded separately (by £100m of borrowing, contingent on Treasury approval) and therefore do not require access to the Change Fund, which should remain service-focussed.

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