Rachel Fergusson, External Affairs Assistant, Money and Mental Health Policy Institute

What the government’s new cost-of-living announcements mean for people with mental health problems

26 May 2022

Today the Chancellor Rishi Sunak announced new support measures aimed at easing the cost-of-living pressures facing households. It included one-off payments totalling £650 for people on the lowest incomes, and an additional £150 payment for those receiving disability benefits and increased support with energy bills later this year. 

We’re still analysing the details of the announcements. But on first thoughts, the new package of support marks a big step forward, and we’re delighted that the government has listened to us and other campaigners by committing more support to those most in need. 

Why was this action needed?

Since the cost of living crisis set in, we’ve been calling on the government to step up action to support people who are struggling. Our most recent research revealed the crisis was not only hitting people’s finances, but taking a huge toll on people’s mental health too. Members of our Research Community tell us about how they were being forced to cut back on essentials like food and heating, and the detrimental impact this is having psychologically.

The new support measures

We’re particularly pleased to see targeted support for those receiving all means-tested benefits, who will now receive two payments amounting to £650 in total straight to their bank account in July and in the Autumn. This will soften the blow of rising costs for those on the lowest incomes being hit the hardest. It is also positive to see the government recognising the additional pressures faced by people with disabilities – including those with mental health problems – by granting a one-off payment of £150 for those on disability benefits. 

It was also announced that the reduction in energy bills later this year has been doubled to £400 for every household, and will no longer have to be paid back. This grant will provide a much needed boost to help households manage the increase in the energy price cap due in October. 

Potential issues with the new support

This action is welcome, but there are some important considerations to be had to make sure this support is as accessible as possible and works for those who need it. One initial concern is the delivery of the energy bill reduction for those on prepayment metres. With individual firms responsible for issuing reductions through vouchers, delivery could potentially be inconsistent and there might be an increased risk of people who struggle to engage with their energy provider missing out on enhanced support. 

Some people with mental health problems might also be worried about keeping on top of the money that’s coming into their bank account. Our research shows that symptoms of mental health conditions – like memory problems or impulsive spending – can sometimes make it harder for people to budget and plan ahead. A sudden change in income due to a one-off-payment might make these tasks even more difficult. We would like to see action from government to provide people with more budgeting support so they can make the most of these payments. There is also a role for banks and financial services here to proactively engage with their customers with mental health problems  and provide them with tools and support for managing money as they receive these payments.

More for government to do

Overall, we’re pleased the government has finally taken action providing targeted support for those feeling the most financial pressure. But today’s announcements should not mark the end of government action to support people through the difficult months ahead. For example, we would like to see more  measures to ensure people can access the support they need through the benefits system. We also want to see the government put financial difficulty at the heart of its new national suicide prevention startegy, which is due to be published later this year. We will continue to hold them to account in the coming months, and to push for better support for those who are struggling with their mental health and finances. 

If you’re struggling with your finances and mental health due to rising costs, find out how to get help here.