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Aadya Bahl

October 22nd, 2024

Investing in mental health is both a moral and an economic imperative

0 comments | 5 shares

Estimated reading time: 4 minutes

Aadya Bahl

October 22nd, 2024

Investing in mental health is both a moral and an economic imperative

0 comments | 5 shares

Estimated reading time: 4 minutes

Poor mental health has significant consequences for people’s wellbeing, but also has an enormous economic cost – approximately 5 per cent of GDP in 2019. Aadya Bahl argues for the greater investment in mental health services in the UK, advocating for cost-effective treatments that prioritise societal wellbeing and have sizable economic benefits.


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Mental illness is a leading cause of absenteeism and a driver of long-term sickness, which poses a significant economic cost due to economic inactivity. It accounts for half of all morbidity (the rate of disease in a population) among working-age adults. Mental health issues reduce output in OECD countries by six per cent. Roughly 20 per cent of the working age population deals with mental disorders, and is at a considerable employment disadvantage. Even for those employed, mental illness leads to more frequent absences or presenteeism (working through sickness at lower productivity levels). In the UK, mental health problems cost the economy £117.9 billion in 2019, approximately five per cent of GDP. Expanding the availability of low-cost but high impact mental health treatments like talking therapy should be a Government priority in this coming Budget. It’s an investment that will provide the state with a significant economic return, but more importantly, it will have a positive impact on people’s wellbeing.

British data reveal that abolishing depression and anxiety would reduce national misery by 2 percentage points, a shift as significant as eradicating poverty, unemployment and severe physical illnesses combined.

The case for investment

Mental health conditions and substance misuse disorders account for 21.3 percent of the total morbidity burden (the overall impact of disease) in the country. One in six adults have a common mental health condition such as depression or anxiety, while over 551,000 people have a more severe mental illness like bipolar disorder.

Mental health is the single biggest predictor of life satisfaction. British data reveal that abolishing depression and anxiety would reduce national misery by 2 percentage points, a shift as significant as eradicating poverty, unemployment and severe physical illnesses combined. This underscores the profound impact mental health has on people’s lives.

A breakthrough: NHS Talking Therapies

The mental health landscape has significantly changed over the last 20 years, with emphasis on the importance of effective and tailored treatment. But there is still far more to be done. In 2000, only nine per cent of people diagnosed with depression received psychological therapy despite evidence showing it was effective.

In 2006, the Centre for Economic Performance’s (CEP) Mental Health Policy Group published “The Depression Report”, calling for a new, cost-effective way to address depression and anxiety. This led to the launch of the NHS Improving Access to Psychological Therapies programme in 2008. The programme, since renamed NHS Talking Therapies, now treats more than one million people a year

NHS Talking Therapies is effective and cost-efficient, paying for itself within two years by reducing healthcare costs and helping people return to work.

An evaluation by Ekaterina Oparina, Christian Krekel, and Sorawoot Srisuma, patients’ mental health is more likely to improve after receiving around eight sessions, with a recovery rate of 43 per cent (after accounting for natural recovery). Patients who were either unemployed or on long-term sick leave were three per cent more likely to be employed at the end of their treatment. Its success has also inspired similar programmes in countries like Norway and Sweden. The programme now treats patients at an average cost of £1,000 per patient. It is effective and cost-efficient, paying for itself within two years by reducing healthcare costs and helping people return to work.

But the programme does not treat individuals struggling with addiction, personality disorders, and severe mental illnesses like schizophrenia and bipolar disorder. For instance, just 2 percent of those experiencing psychosis receive talking therapy or counselling, even though psychological treatment is recommended for this group. Further, only 17 per cent of people who had depression and anxiety took part in the programme in 2018, showing how demand is outstripping supply. As such, there is a strong case for expanding services to cover those with more severe mental health conditions.

Expanding the service

A proposed new service, modelled after NHS Talking Therapies, would provide tailored support for conditions such as psychosis, bipolar disorder, and addiction. This programme would be led by a psychological therapist to deliver specialised therapies in more intensive formats, as these conditions often require more than the usual eight sessions. For instance, 16 sessions of CBT are recommended for psychosis and bipolar disorders.

According to the Value for Money report by CEP’s David Frayman, Christian Krekel, Richard Layard, Sara MacLennan and Isaac Parkes, the cost of such a service would be offset within two years through savings in healthcare costs and increased tax revenues from those who return to work. But more importantly, it would relieve suffering for the affected individuals and their families, improving lives beyond economic considerations.

Supporting people into employment

Employment support is increasingly recognised as a crucial component of mental health care. By co-locating therapy services with targeted employment support, more people with mental health challenges can be helped back into work. This is available to patients in the Talking Therapies service and is being expanded through the NHS’s Individual Placement and Support scheme.

From 2024-25, the expansion aims to provide employment support through Talking Therapies to 100,000 people, and an additional 13,000 people with severe mental illness in secondary care, per year. It will also expand access to those with moderate mental and physical health issues in primary care. For moderate cases, such support pays for itself within five years, while for severe cases, the benefits are only 70 per cent more than costs. While this has a clear net benefit, it is more expensive to support employment for those with severe conditions, as it is more likely to be continuous and not time-limited.

There is a strong economic argument for investing in mental health services, but the more profound reason is the human impact.

The Government is also reported to be keen to expand an employment-support initiative used at the Maudsley psychiatric hospital in south London. But the real value of this initiative lies in its ability to rebuild lives. For those with severe mental health conditions, even a small improvement in wellbeing can be life changing.

There is a strong economic argument for investing in mental health services, but the more profound reason is the human impact. Mental health issues cause immense suffering for individuals, their families, and the wider community. Expanding access to mental health support, especially for those with severe conditions, is about more than balancing budgets or boosting productivity. It is about improving the quality of life for some of the most vulnerable people in our society.

We must put people first. By investing in mental health services that reach everyone in need, we can prioritise wellbeing and allow every individual the chance to lead a happy and healthy life.


All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science.

Image credit:  Daniel Suhre Shutterstock


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About the author

Aadya Bahl

Aadya Bahl is a Policy Officer at the Centre for Economic Performance at the London School of Economics. Her work aims to use data-driven and research-backed insights to inform policy decisions. Prior to joining CEP, she worked with Metro Dynamics across multiple projects aimed at driving inclusive growth across places, and the GM Chamber of Commerce on the Local Skills Improvement Plans. She has a Master's in Development Economics and Policy from the University of Manchester.

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