Dom Taylor, External Affairs Intern, Money and Mental Health Policy Institute

What living in London means for your money and mental health

18 August 2022

When we talk about the areas of the UK that need ‘Levelling Up’, we may think of places like the North East and North West that have historically received lower levels of investment.  London – the commercial hub of the UK – may not immediately spring to mind as a candidate desperately in need of levelling up. 

But as our latest regional analysis reveals, certain people are being left behind in London. This is particularly true for people with mental health problems who face significant financial burdens, many of which are exacerbated by living in the capital. In this blog, we’ve set out some of the biggest challenges people with mental health problems experience in London and what local and central government can do to address them.

Unaffordable housing

Spiralling rents and demanding mortgage payments are not a problem unique to people with mental health problems, nor just those in London. However, the difficulty faced by people with mental health problems in meeting these financial commitments is more pronounced in London than any other area of the country. In London, 31% of households with at least one adult with a mental health problem face high housing costs in relation to household income. This is compared to 17% for the rest of the London population. 

The gap between Local Housing Allowance (LHA) – which sets the level of Housing Benefit – and average rents is also largest in parts of London, with the gap reaching £200 and over in some parts of the capital – double the gap in some other parts of the country. 

“There is a local housing allowance for rent but it’s around £300 per month…there is a lack of affordable housing and you can’t find a private rental for less than £450 a month.” Expert by experience

Being behind on council tax payments

Housing isn’t the only cost that people with mental health problems are disproportionately behind on in London. 30% of people with a mental health problem in London told us they had fallen behind on paying their council tax last year. This is a substantially bigger percentage than in other regions, with other areas of the UK ranging from 9% to 19%. 

“I appreciate that they need council tax bills paying on time, but when they are fully aware that you have a disability, these threatening letters and actions are totally the wrong approach, and could send someone over the edge.” Expert by experience

London’s employment gap

Our research reveals that another factor contributing to the financial burden experienced by people with mental health problems in London is the employment gap. People with mental health problems are 26 percentage points less likely to be in employment than people without mental health problems. We heard that key barriers to employment include: workplace discrimination and stigma; a lack of flexible employment that they can manage their condition alongside; and a lack of access to adequate employment support.

What leaders can do

To help improve people with mental health problems in London’s access to affordable housing, we’d like to see this government increase LHA to 50% of local rents and abolish the Benefit Cap that is preventing people  from accessing adequate help. Alongside this, increased funding to the provision of social housing is also essential. On a local level, we’d like to see local authorities implement ‘selective landlord licensing schemes’. As well as enforcing standards that work to improve quality and reduce overcrowding, which is currently a key driver of both new mental health issues and exacerbating existing ones, these schemes should include guidelines that better protect and support tenants who are unable to keep up with rent.

Tackling the issue of council tax arrears will require concerted efforts by local authorities in London. We’d like to see councils adopt Citizens Advice Council Tax protocol. By doing this, local authorities would adhere to safer methods of debt collection – hugely important to people with mental health problems. We acknowledge, given the size of the challenges, both local and national help is needed. To ensure that local leaders are able to provide adequate relief to households struggling with council tax payments, the Department for Levelling Up, Housing & Communities should increase funding to local authorities.

To support people with mental health problems to get into and stay in work, local leaders should encourage more local employers to sign up to charters like the Mental Health at Work Commitment. They should also facilitate the provision of more employment services that are accessible and supportive to people with mental health problems.

The need for Levelling Up isn’t going anywhere

However ‘Levelling Up’ looks come September when the next Prime Minister is announced, tackling regional inequality should remain a priority. Equally crucial, however, is ensuring that such a plan delivers for those ‘left behind’ within regions. And that includes areas whose prosperity we might take for granted.

You can read more about the economic gap between people with and without mental health problems, and how this gap varies from region to region, in our latest report – No One Left Behind.