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Mental health & the cost-of-living crisis

As 2022 continues to see rising energy prices & inflation, and lower benefits support, Jasmine Wyeth from Rethink Mental Illness and McPin’s Dan Robotham look at how money will impact the nation’s mental health more than ever this year – and where to access support

We all know the Covid-19 pandemic has been hard on people’s mental health, including for financial reasons. Though the lockdowns appear to be over for good, the pandemic continues.

As the Government tries to balance the books amid the war in Ukraine, we are entering an unprecedented cost-of-living crisis which will hamper any efforts to recover from these difficult times.

This is a grave concern. The number of people with ‘lived experience’ of financial worries and mental health issues is growing. It has never been more important to include the voices of those worst affected in shaping policies and systems designed to support them.

All too often, the voices of those most affected are absent in policy decisions, as evidenced in parliament decisions, such as the Universal Credit uplift reversal.

What’s the link between money and mental health?

Sadly, we know that people affected by mental illness will be among the worst affected by this cost-of-living crisis.

Two years ago, McPin’s evaluation of Rethink Mental Illness’s Mental Health and Money Advice (MHMA) service highlighted the importance of tackling money issues and mental health together. This is even more important now.

Mental health services must be comfortable establishing the degree to which money issues affect the people they serve. They must know where to signpost/refer. Those working in mental health and money advice services want healthcare professionals to refer to them once a debt or benefit issue is established. These things cannot be separated.

A recent Rethink Mental Illness survey, which asked almost a thousand people living with mental illness about their financial experiences and priorities, found that, even before the pandemic, money issues were strongly linked to poor mental health. For example, more than half (59%) said that over the last 12 months concerns about money had impacted on their mental health “a lot”.

Other issues included:

  • 38% experienced not having enough money to afford enough food
  • Half experienced not having enough money to repair or replace an essential item
  • A third (29%) experienced not having enough money to afford utilities – the recent increase in fuel and energy prices means that this figure would be higher if people were asked today.

What emerges is that benefit rates are too low for people to live on, which means going without or borrowing money (often at high interest rates) to make ends meet.

What impact will recent changes have on people’s mental health?

Many people with mental health problems and other long-term health issues rely on the welfare system to survive because they are unable to work due to their condition. One of the most common sources of support is Universal Credit (UC), a monthly benefits payment intended to help people with living costs.

UC is one of the most common types of benefits in the UK. From March 2020 to October 2021, during the early stage of the pandemic, it was temporarily increased by £20 a week. This was a lifeline to many – though many claimants struggled to meet their basic costs even with the increase.

Unfortunately, the £20 increase ended in October 2021, despite many people and organisations (including the Joseph Rowntree Foundation, Rethink Mental Illness, Citizens Advice, and others) advocating for it to be made permanent.

Latest figures show that sanctions are rising again, indicating the conditionality regime is beginning to return to ‘normal’ after the temporary suspension during the most restrictive phase of the pandemic. The adverse sanction decision rate for July 2021 was 15,929, which is now comparable with pre-pandemic levels, e.g., Feb 2020 was 18,142 & March 2020 was 10,788.

Sanctions cause enormous stress to people living with mental illness and will only add to the cost-of-living crisis.

The recent increase in energy prices has been well publicised and affects almost everyone, after the cap on charges was raised last October to meet suppliers’ extra costs. This will have a huge impact on people’s finances, and therefore mental health – and, once again, particularly for people already struggling with mental health issues.

How can people protect their mental health?

If you’re struggling with your finances and mental health, it’s important to access support from charities and services dealing with finance and mental health issues combined.

One example is the Mental Health and Money Advice service (MHMA) mentioned above, which supports people with mental illness through welfare and debt advice. In particular, it now includes a section dedicated to how to manage your mental health and money following the energy price rise, along with a toolkit.

There are many other charities that support and provide grants for people living in fuel poverty, such as the Warm Home Discount scheme. Rethink Mental Illness also operates a Mental Health Breathing Space debt relief pilot scheme for people in crisis.

What next?

The responsibility can’t just be on the people impacted by the crisis.

The Government committed to setting up an Extra Costs Taskforce as part of last July’s National Disability Strategy. The Taskforce will look at the extra costs associated with different health conditions. This is a positive step forward. However, it doesn’t change the fact that the welfare system is harming many people and is in need of fundamental reform.

We have noticed that money worries and debts are becoming more and more central to mental health problems. This has become more obvious over the past five years.

We have heard many stories from people feeling afraid of the Department for Work and Pensions (DWP), subjecting claimants to humiliating processes, such as holding up a picture of themselves with a copy of today’s newspaper. People tell us they feel the Government is failing to understand the scale of the challenges they face or to imagine life from their perspective.

Financial security is essential for good mental health, and that includes having a fair welfare system that provides a safety net for all who need it. We do not have one of these in the UK, and the cost-of-living crisis is increasing the number of people who need it. Collective action is essential to ensure that the situation does not get worse for people experiencing financial hardship and mental health problems.

If you need support around money and mental health take a look at Rethink’s website, and sign up to McPin’s newsletter to stay up to date with our work


Jasmine Wyeth is a Senior Policy Officer focusing on finances and social security at Rethink Mental Illness.

Dan Robotham is Deputy Research Director at McPin.


References/further reading:

Link between sanctions and poor MH: https://www.cambridge.org/core/journals/journal-of-social-policy/article/abs/unemployment-sanctions-and-mental-health-the-relationship-between-benefit-sanctions-and-antidepressant-prescribing/CFF6851FDD482875D3A8C7B68EBA25BD  

Psychological distress related to introduction of UC: https://www.thelancet.com/journals/lanpub/article/PIIS2468-2667(20)30026-8/fulltext

Anxiety related to PIP: https://www.tandfonline.com/doi/full/10.1080/09687599.2021.1972409

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