Conor D’Arcy, Head of Research and Policy, Money and Mental Health

Budget 2021: More trick than treat for those most in need of support

27 October 2021

With lots of the major policy announcements already trailed ahead of today’s Budget, attention in the run-up focused on what ‘rabbit’ the Chancellor would produce from his red box. While that was a welcome surprise, for people who are out of work and looking past Halloween to a worrying winter, it’s likely to have felt more of a trick than a treat.

Universal Credit changes

The new announcement – changes to the structure of Universal Credit (UC) – is a big deal for many of the families who have been hit by the £20 cut to UC. For millions of households who are in work and receiving UC, today’s changes to the taper rate and the work allowance will mean they keep more of the money they earn from employment. That’s a meaningful shift and the fact it’s being fast-tracked to come into effect in December will be a relief for those who are already struggling.

But for those on UC who are not in work – a significant portion of whom will also experience mental health problems –  there was little in today’s announcements. While the £20 cut affects all UC recipients, if you’re not in employment today’s changes won’t boost your income, with the same true for the jump in the minimum wage.

Price pressures

If you are in that category, perhaps the biggest news came early on in the Chancellor’s speech. The Office for Budget Responsibility, the independent body that analyses the UK’s finances, now expects inflation to average 4% in 2022. The expectation remains that this pace won’t be lasting and cuts to taxes, duties and levies for various sectors might help slow some of the bills facing consumers. One potential positive was the additional funding given to local authorities, although how directly this translates into public services or the rate of council tax remains to be seen.

This means there are signs that this is going to be a tough winter for many consumers to manage. One of the first pinch points for households is often with key bills, like energy and credit cards. While anyone can struggle with payments, next month we’ll be publishing a massive piece of polling which makes clear the much higher risk people with mental health problems face of falling behind. There are a range of reasons for that, but lower incomes are a crucial factor. With no boost for those out of work – who are likely to be among those already finding it hard to keep pace with outgoings – looking ahead to winter won’t bring much cheer.

Little on mental health

The financial pressures that households are likely to be facing are all the more concerning given the terrifying links between money worries and mental health problems. Some new mental health funding was announced to support new parents and veterans and to upgrade facilities. But against the backdrop of mental health problems remaining above pre-pandemic levels and the backlog in treatment, this felt unmatched to the need. 

The biggest missed opportunity here was to acknowledge those links between our mental health and our finances; if this is going to be a tough winter, the least politicians can do is boost the support services that many will rely on. Expanding the pilot we are collaborating on with Citizens Advice and researchers at King’s College London – to embed money advice in talking therapies (IAPT) that people experiencing poor mental health receive – would be an innovative way to address issues people are facing today. Instead, unfortunately, for someone who can’t work because of their mental health, there was little to suggest that the country built back was much better than the one that went before.