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Pandemic unemployment could put another 200,000 people at risk of poor mental health

by James Hacker
16 April 2021

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An additional 200,000 people in the UK will experience poor mental health by the end of the year due to an anticipated rise in unemployment, the Health Foundation has estimated.

The estimate is based on projections from the Office for Budget Responsibility (OBR), which show the UK unemployment rate could reach 6.5% by the end of the year, meaning an additional 900,000 people will be unemployed compared to before the Covid-19 pandemic.

The Health Foundation’s analysis, which was published today (16 April), suggested this will result in an additional 200,000 people having poor mental health, bringing the total number of unemployed people with mental ill health to 800,000 – or two in five – by this winter.

The analysis also found that the unemployment rate was highest among people aged 18 to 24 years old (14%), people with lower qualifications (7.8%) and people from minority ethnic backgrounds (7.6%).

The upcoming period of recovery is an opportunity to ensure that unemployment efforts are better able to support mental health, the Health Foundation said.

It added that while initiatives like extending the furlough scheme will support mental health, the Government’s employment support programmes ‘currently fail to properly account for the mental health needs’ of people who are out of work.

Stem root causes to support NHS

The charity’s report said that investment in mental health can prevent additional financial and capacity burdens on services that are ‘already overstretched’.

While GPs are usually the first point of contact when patients access mental health services, it noted that steering people towards self-led mental health services like apps has become commonplace over the last year.

It also referred to research it published in November 2020, which suggested that there could be 11% more mental health referrals every year, over the next three years, costing at least £1.1bn each year.

‘A further increase in poor mental health because of ongoing restrictions and economic issues in 2021 would add to this figure,’ it said.

Government policy should therefore aim to ‘help stem the root causes’ of poor mental health ‘rather than relying on the NHS’s already overstretched mental health services to meet this excess demand’, the report concluded.

Embed mental health support in employment programmes

The review made several recommendations to Government to ensure unemployment reduction schemes – like JETS and RESTART – as well as new employment programmes, should consider their impact on mental health and wellbeing.

Providers should be accountable against outcome measures that include mental health, the report said, to ensure that employment found is a detriment to a person’s psychological wellbeing.

It also suggested  that individual placement and support services – which support people with severe mental health difficulties into work – could be fully integrated into UK employability provision.

The report also highlighted the ‘unprecedented level’ of claims made to the Universal Credit system during the first wave of the pandemic.

Earlier research has shown that the system led to an increase in psychological distress attributed to the claims process when it was first introduced in 2013.

Today’s research also highlighted that the shift to moving welfare services online has further exacerbated feelings of isolation and loneliness.

David Finch, senior policy fellow at the Health Foundation, said the Government’s Covid recovery plans are ‘rightly focused’ on tackling the expected rise in unemployment, but ‘more can be done’ to support the mental health of unemployed people.

He added: ‘A first step to ensuring that the social security system provides an adequate income is making the temporary £20 uplift to Universal Credit permanent.

‘But the Government can also do more to account for the mental health needs of those in unemployment by easing conditions around claiming benefits, providing more personalised support, and improving the design of employment programmes, holding providers accountable for better mental health outcomes.’


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