Mental health 360: funding and costs

Overview

Spending on mental health services has increased in recent years 

According to the National Audit Office (NAO), in 2021/22, the NHS spent £12 billion on mental health services in England, accounting for around 8% of the total NHS budget. The two largest areas of spending were community mental health services and inpatient care. Services for children and young people comprised 8% of the total spend on mental health services. Of the total spend, 4.2% went to non-NHS providers, including independent sector and voluntary, community and social enterprise (VCSE) organisations. 

Between 2017/18 and 2022/23, total spending on mental health services went up by an average of 2.7% a year (in real terms). In the same period, spending on children and young people’s mental health increased by an average of 7% a year. 

Funding targets are being met 

The NHS Long Term Plan committed to increase investment in mental health services faster than the overall NHS budget every year between 2019 and 2024. This would mean mental health services receiving a growing share of the NHS budget, worth at least a further £2.3 billion a year in real terms by 2023/24. It also committed to investment in children and young people’s mental health services growing faster than both overall NHS spending and total mental health spending. Analysis by the NAO found that in 2021/22, NHS England was on track to meet these commitments in cash terms (ie, without adjusting for inflation), but noted that rates of increase were very slow.  

Funding increases are not keeping pace with demand 

Historically, funding for mental health services has been insufficient relative to population needs and in the extent to which mental illness contributes to the global burden of disease. This underlies the government’s commitment to parity of esteem between physical health and mental health. Although funding is increasing, mental health services are now facing demands that were not anticipated at the time of the NHS Long Term Plan; these include the impacts of the Covid-19 pandemic, increased demand for mental health care, and higher than expected inflation. There are also extra costs associated with ambitions to implement additional waiting time targets and improve areas of care identified as part of reforms to the Mental Health Act (1983), although the timetable for the latter is currently indefinite. The British Medical Association and Royal College of Psychiatrists have both estimated the additional funding required to meet these demands, which ranges from £2.3 billion to £2.5 billion in 2023/24.  

A survey of mental health trust leaders found widespread concerns that investment was insufficient to address historical underfunding of mental health care. In addition, concerns were shared that methods used to increase investment did not ensure that money was spent locally on the right priorities within mental health or provide full transparency over how much frontline provider spend had increased by. A recent survey of trusts suggests that financial constraints are restricting the provision of core services, and some providers have constrained expansion of the mental health workforce.  

Funding is not evenly distributed across the sector 

Increases in funding for mental health services have been uneven across localities and services. For example, according to the Children’s Commissioner, the average spend per child in the population by NHS commissioners in England ranged from £34 to £141 in 2021/22. 

National policy and associated investment have been directed towards addressing specific issues such as suicide prevention, and developing or expanding specific services or models such as community-based rehabilitation care. This has resulted in some significant advances, such as a doubling of access to perinatal mental health services since 2018.  

Services that have not been targeted for investment by national programmes are subject to negotiations with commissioners at a local level. However, few of these have specific service specifications and there is no optimum level of investment for each service. This can lead to unwarranted variation. For example, the Getting It Right First Time (GIRFT) programme on adult crisis and acute care found that lower costs tend to be associated with lower skill mix and higher caseloads, which makes providing optimum care and treatment more difficult. 

More capital investment is urgently needed 

The mental health estate is some of the oldest in the NHS, with 18% constructed before the NHS was formed and multiple sites classified as ‘not functionally suitable’. Between 2018/19 and 2021/22, there was a slight rise in trusts’ capital spend but the maintenance backlog grew to a far greater extent. National data shows that there were 810 incidents in 2022/23 relating to infrastructure risks on mental health and learning disability sites. The Independent Review of the Mental Health Act and the Care Quality Commission (CQC) also found that many mental health wards are unsafe for staff and patients, and provide poor-quality care in unsuitable buildings:  

NHS providers should be improving as well as maintaining their estate to ensure therapeutic environments for providing care. National programmes of capital investment for mental health services focus on replacing dormitories with single en-suite rooms, and improving urgent and emergency care settings (including avoiding using police cells for temporary detention of people experiencing a mental health crisis). In addition, systems are expected to prioritise patient safety projects, such as removing ligature points, and to ensure sufficient inpatient capacity for children and young people. However, even with this investment, current trends indicate that the gap between spending and what is needed for basic maintenance of the estate is widening.