Teal speakerphone. Text: Podcast

Podcast: Frederico Cardoso

28 March 2024

Thea Joshi is joined by Frederico Cardoso, the Centre’s Senior Economist, to hear about a major new report calculating the economic and social costs of mental ill health. While a £ sign is an imperfect measure of the toll that mental health problems can take on people’s lives, this economic analysis has broken new ground in assessing the scale of the problem and the consequences for our economy and society of failing to act. Frederico breaks down and contextualises the figures in the new report and shares some of the solutions that would support better mental health and reduce costs in tandem.

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Music by scottholmesmusic.com

Listen to the episode on Spotify or Apple Podcasts. The full transcript is available below.

Show notes


Alethea Joshi (AJ): Hello and welcome to Centre for Mental Health’s podcast. Centre for Mental Health challenges policies, systems and society so that everyone can have better mental health. I’m Thea Joshi and each episode I speak to people with experience of mental health difficulties, someone working in a specific area, or a member of our team about mental health and social justice. And today, I sat down with Frederico Cardoso, Senior Economist here at the Centre, to hear about a new report on the economic and social costs of mental health problems. We know that mental ill health has a devastating impact on people’s lives. And we talked about how these figures reflect that albeit imperfectly. We talked about the human costs as well as costs to the economy and to health and care services, and the solutions that we’re calling for as part of our mentally healthier nation campaign. Before we get into the conversation, just a reminder that Centre for Mental Health is an independent charity, which relies on support. So any donation however big or small, goes a long way. You can donate at centreformentalhealth.org.uk/donate. Hope you enjoy.  So welcome Frederico, to Centre for Mental Health’s podcast. It’s lovely to have you here with us.

Frederico Cardoso (FC): It’s lovely to be here. Thank you.

AJ: I’m really delighted to sit down and chat about this major new report that’s just come out this week written by you and Zoë, looking at the cost of mental ill health in England. Really major report and I just wondered if you could talk us through a few of the kind of key headlines from it.

FC: Of course, very happy to. So the total estimated cost in 2022, in 2022 prices, was of £300 billion, which is obviously a large, large figure, and one that was surprising to us if I’m being completely honest. This is comprised of three major elements. So we have economic costs, sitting at £110 billion. And those represent losses to the economy due to mental ill health. So those would include business costs of sickness absence and presenteeism at work, as well as staff turnover and worklessness among people with mental ill health. Then we have human costs at £130 billion. And that is the value expressed in monetary terms of reduced quality of life among people living with mental health difficulties. And then finally, we have health and care costs sitting at £60 billion. And those are the costs of providing health and care services for people with mental health difficulties. And this includes support provided by public services, privately funded healthcare and informal care provided by families and friends. We also include a mention to intangible costs, as well as some other costs that we know exist, but we’ve decided not to include in the model.

AJ: Wow. So yeah, the scope of this is obviously broad and comprehensive. We’re really trying to see the true figure behind mental ill health. And obviously, as you’ve said, the numbers are huge. And we will get into kind of contextualising them for those of us who are not economists like myself, but yeah, wow. So significant findings.

FC: Yes, definitely. And I think an important point that is worth stressing is that, obviously health and care costs are not meant to be seen as a burden to society, imposed by people with mental ill health. This goes beyond the scope of the study, but the relational nature of this model would seem to suggest that, for instance, you know, changes in one realm may impact the other, say, increased investment in mental health prevention and treatment and the associated costs could actually decrease the economic and human costs associated with this. We can also look at this from an industry perspective. So you know, we have a large share of the cost that is borne by people living with mental ill health, and their families, this would fit at £175 billion. If we divide it by industry, business would also carry a substantial part of this cost, sitting at £101 billion. And finally, for government, this figure would fit around £25 billion in 2022.

AJ: It’s really interesting that as you said, the key costs fall on the people struggling with mental health problems and their family. And that’s what we see in our research, but just really interesting to have that kind of notified and sort of recognised I guess, in economic terms. And also, as you say, about this relational model and that often when we spend money on prevention, we see that reflected in lower levels of mental health problems, lower levels of the losses and costs around that. And that’s exactly what we have seen throughout the Centre’s history of economic research is where you invest in evidence based approaches to mental health problems, you do see economic benefits, as well as obviously human flourishing, which is what we’re all about. But if listeners are anything like me, obviously these numbers can be a little bit mind boggling when we start getting into the billions and, you know, our eyes sort of glaze over. So can you help us just contextualise these figures a little bit?

FC: Of course, very happy to. And I think these figures are mind boggling for anyone. If anything for the sheer magnitude of what we’re talking about. In terms of comparisons, it would be tricky to compare them to some other figures, insofar as some of the costs associated with mental health are not factored in in traditional economic measurements, such as GDP, say. And so some of the comparisons that we can make, serve only as a sort of reference point for the magnitude of the costs. But there are some interesting comparisons out there. So for instance, we know in a perhaps slightly London centric comparison, we know that TfL’s operating costs for 2022 were around £8 billion. So it’s a stretch and obviously one can’t say this, but it’s kind of equivalent to the cost of running all public transport in London, 37 times. That’s one of the comparisons we can make there. It’s also larger than the total consumer expenditure on food, drinks, and catering across the whole of the UK in 2022. So that kind of gives us a tangible measure of what we’re talking about.

AJ: So whilst obviously not directly comparable, the cost of mental ill health was larger than the cost of all spending on food and drink and catering in the same year?

FC: Yeah, it’s a lot. Also, importantly, again, one can’t compare it to GDP. But if we were to try to find a somehow comparable country in terms of like the values we’re talking about, it’s actually larger than the GDP of Portugal, for instance, which was at £208 billion in 2022. And finally, and perhaps this is, I think, arguably the most shocking figure, it’s one that is very fresh in everyone’s mind. According to some estimates, one study in particular, the impact of Covid, on the UK economy in 2020 was around £260 billion. So those would be £291 billion in 2022 prices. So to a certain extent, the magnitude of the cost is comparable to the impact of COVID, in the UK economy in 2020. And obviously, that is an event that I think everyone can understand the magnitude in terms of economic impact. And it’s almost fair to say, obviously not from an economic perspective, but almost fair to say that mental ill health is kind of like having a pandemic every year. In that sense, which is worrying.

AJ: The same kind of costs is having a pandemic every single year. I mean, I think that’s a really brilliant way of bringing it close to home for everyone, because we know that that was huge. We know that that was devastating, obviously, for people’s lives and health, but also economically. And so it just feels really clear that the Government cannot not take this problem seriously, in terms of both the human impact and also the economic impact. But I mean, how does this compare in terms of health care spending?

FC: That’s an excellent question. In terms of the NHS commissioning budget for 2022/2023, if we exclude drawdown of previous year’s surpluses, that sits at £153 billion. So we’re talking about roughly double the NHS commissioning budget. In terms of Department of Health and Social Care (DHSC) spending, you know, total departmental expenditure limit, that would sit at around £182 billion. So when we talk about £300 billion, obviously, it’s a lot larger than that.

AJ: Wow, thank you. That’s so helpful, just to get a little bit of context when we’re talking about these numbers rather than just in a vacuum. So thank you so much. And obviously, I think we’ve kind of touched on this, but it kind of goes without saying we know at the centre that a £ sign cannot ever truly reflect the extent of suffering that is caused by mental health problems both personally and in families and friendship groups. But could you just tell us kind of why we felt it was so important to calculate and to share these figures.

FC: Definitely. And I would definitely echo your words in terms of it being an imperfect measure of the impact of mental ill health across society. We know that it presents an enormous burden on individuals, support networks, government, business and society as a whole. And while it is impossible to fully assess the problem, and admittedly a £ sign is not a good representation of the true impact, there is nevertheless some value in estimating it. It helps us understand the significance of mental ill health. It helps us compare it to other costs that we know exists. And it just shows that it’s an issue that is deserving of policy investment, and attention and reform. So from our perspective, and from an economic analysis perspective, by including some of these impacts, which would traditionally be overlooked in standard economic valuation, as they’re currently not factored in in the way we measure our economy, such as informal care, or unpaid work, or decreases in wellbeing and quality of life, we are in a way contributing to them being considered into the decision making process of policymakers. And also this allows us to show and demonstrate the real economic burden of mental ill health, which we believe has been underestimated until now. So that is crucial in order to understand the full extent of the problem.

AJ: Thanks so much. I think that’s really helpful. And I think, kind of all the way through the Centre’s economic work, it’s been about, you know, we cannot put a £ sign on these things, but equally, we know that what gets measured, gets funded, gets recognised as a real issue. And I think so often it feels like we’re kind of going mental health is a really big problem, what are you going to do about it? And we often feel that it’s been neglected as an issue of being dismissed. And this economic work is another way of going, this is really important, what are you going to do about it? And also, I think we know that, sadly, you know, it should be enough to say people are suffering, what are we going to do to change that? But sadly, often, it needs to have an economic value next to it. So it’s another way of going like, actually, we cannot afford not to invest in this area, whatever your morals or ethics are on this.  I fully agree. And I think, yeah, that’s exactly the main point behind the whole report. And I think what it ends up showing is, we are spending the money and we’re losing this money, whether we want it or not. It’s just a matter of where we spend it. Because the costs are there, whether we want it or not. That’s so helpful. Yeah, this money is being spent. How do we best spend it to ensure that more people have a better quality of life, better lives, essentially, right? Better mental health.

FC: Exactly.

AJ: Thanks for that, Fred. And so you touched on the cost at the beginning and the kind of breakdown there and the economic costs, the health and care costs, the human costs of mental health. But could you just drill down a little bit into this for us. What do these costs cover? What kinds of things are causing this expenditure?

FC: For sure, with pleasure. So, in terms of the the economic costs, this is perhaps the most comprehensive study so far, in terms of understanding the economic costs of mental ill health. So, the economic costs, primarily focus on productivity losses for the working-age population. And those cover sickness absence, so the economic costs of people having sick leave. The cost of presenteeism, so people showing up to work, but not necessarily being in a great state to work, and so, obviously, that that is both draining and inefficient. Then we have the cost of economic inactivity, so individuals that are economically inactive because of mental health concerns. Then we also have unpaid work, so all the kinds of other tasks that individuals may perform in their household or in their community, which are not traditionally monetised in the way we currently measure and reward services – I’m thinking cooking, cleaning, laundry, volunteering, driving, those kinds of things. And we we put a £ sign and an estimate to that and we try to assess the decreases and the economic losses coming from that.

And then a big important cost is around staff turnover. So all the people that end up changing jobs, or just moving around basically because of mental ill health concerns. We know that the current job market is precarious and isn’t stable and isn’t necessarily conducive to good mental health. And so sometimes people may choose to change their jobs as a reflection of this. And so obviously, that has a large economic cost. And finally, we have lost tax revenue, so all the tax that is not being received by the government, due to unemployment and due to economic inactivity. So those are the economic costs that we have quantified, while recognising there are several others that we know exist, and we just haven’t quantified in this study.

Now moving on to health and care costs, we focus on the more traditional health and care measures that have pretty much a one to one comparison with the original 2002 study. So those will be around GP expenditure, medication, local authority social services, NHS community and hospital health services, as well as other public sector costs. So there we have only the administrative costs. So we do not include the cost of benefits, but only the administrative costs of social security, as well as providing accommodation for those who are unhoused and mentally ill. Then we also have the costs associated with counselling and therapy, in terms of private spending. As well as, and perhaps this is the largest share of the cost in health and care, which has to do with informal care provided to people who have mental health difficulties. So those would be the main health and care costs that we have quantified.

We know others exist. For instance, we have the cost of comorbidity, so physical and mental health, those would sit at between 10 to 16 billion. And we have decided not to include that in the final figure. But so those would be the main ones that we have included. And finally, we have human costs, so those would cover the working-age population, and we estimate wellbeing decreases, and then we estimate quality of life decreases for children and for what we consider to be the retired population in this case, in more sort of lay terms it would be the older population so basically everyone over the age of 65, but for the purpose of this study, we consider that these people are retired, obviously, that may not be the case. And then we have the wellbeing decrease, and the quality of life decrease associated with premature mortality, I’m talking suicide, as well as self harm. So those would be the main ones.

We have another cost that we estimate, the cost of mental health among the population in prison. We once again decided not to include this cost due to the risk of double-counting. So those would be the human costs. And finally, we have intangible costs: costs that we recognise exist and we tried to estimate initially. We realised that at present, it would be difficult to do that. But we would encourage research to sort of focus on these areas as well. I’m thinking things like losses in creativity and innovation or a sort of short-term approach to things, and maybe some ill advised financial decisions. Things like decreases in social cohesion and social trust, or higher levels of emigration, the phenomenon we sometimes refer to as ‘brain drain’. All of these costs we know exist, and are perhaps magnified by mental ill health. And we know we’re not quantifying them. But these would be the main categories of costs that we have.

AJ: Wow, thank you. I mean, I think it’s clear and it’s fair to say that this is a comprehensive study. We have covered every base as much as we can. We’ve been clear where things cannot be included. But this is a very thorough study, shall we say. And so obviously, we will link to the report, and we’d encourage you guys to go check it out. There’s lots of really interesting information there. And you’ve really been clear about how these figures have been worked out. So it’s robust, and we’re really pleased with it. And I think it’s worth saying and I know you mentioned this before but it’s very clear that, a) the majority of the costs are falling on the people who are struggling with mental health problems, and b) that that this isn’t some kind of burden imposed on society. That actually, as you said, these costs are occurring either way, and it’s how we choose to spend the money. And I think I would say, and obviously I wouldn’t dream of trying to speak for an entire community, like people with mental health problems. But I think, for me, I sort of felt like it’s not necessarily about feeling like I’m a burden or I’m accruing cost, it’s actually a helpful kind of justification and recognition of the costs that we live with, if you struggle with your mental health. And they’re wide ranging, as you’ve explained, and I think, yeah, as you’ve covered there, you know, the cost of having to self fund therapeutic support, because it’s not available when you need it, you know, we see and we live with these costs every day. And so I think this is a really helpful reflection of the reality, facing people living with mental health problems, that would be my take on it at least.  So I also just wanted to ask, like, what is behind this huge figure? Can you tell us a bit about that?

FC: So it’s an interesting one. And I think, obviously, this goes beyond what I could say in terms of the scope of the study. But there are some factors that feel too big to ignore and could potentially explain what’s behind this large figure. Inflation obviously accounts for some of these changes. And we know that certain costs have remained relatively stable when adjusted for inflation. We’ve also sort of started to understand the economic impact in certain realms that perhaps before we didn’t. Tt hasn’t been long since we started understanding the impact of mental ill health on presenteeism, on staff turnover, on fully assessing the impact on wellbeing and decreases the quality of life. So it’s only been a few years that we’ve been able to like fully estimate these properly. And so those are also reflected in some of the methodological changes in the study. Then also, I think it is fair to say that there have been changes in the prevalence of mental health problems, and consequent shifts in both demand and supply of mental health support that have contributed to this trend. We could also point to micro economic shifts, such as austerity measures, such as high inflation rates, such as the raging cost of living crisis that have disproportionately affected vulnerable populations or groups of the population. And these have exacerbated wealth, racial and gender inequalities. We obviously also know from our study and from other papers that the Covid-19 pandemic has further increased mental health problems. And so that has led to a significant rise in demand for mental health support. And our model from 2020 also suggests that there will be an expected increase in demand in the coming years. And then, finally, we could point from a more hypothetical point of view, obviously, but to other factors, you know, things like technological advancements, the international conflicts that have been going on in the last few years, and the climate crisis, we know are likely to have impacted mental health, with growing levels of climate related catastrophes and eco anxiety contributing to this picture.

AJ: That’s really helpful perspective. And I guess, as we come to the end of our conversation, I am aware that these figures are really big. But I know that there is hope that things can change. So it’s clear to us that these figures, you know, underline a major urgent need for government and all future governments to really take mental health seriously, and the impact of it seriously. So I’m interested to ask you, what do you see as some of the solutions to the problems this has raised?

FC: Thank you. That’s a really important point. And I think one of the risks of this study is to sort of paint a bleak picture. And obviously, we wouldn’t want that. This is meant to be a hopeful calculation that actually sheds some light on some of these underassessed costs, and hopefully, is a bit of a call for action and actually takes us forward. So in terms of pointing to solutions, this goes beyond the point of the current study, it’s not for me as the economist to point to solutions. But we know we have some tried and tested solutions, and we have produced several pieces of evidence that I would probably point to, in terms of highlighting what can be done after finding out that the cost is so huge. So we have the recently published 10 year strategy, A Mentally Healthier Nation, as well as other work such as No wrong door. And these two pieces, for instance, provide guidance on how to alleviate this national economic burden of mental ill health.

So in terms of solutions, some of the ones that I would highlight would have to do with funding the mental health services fairly, with a particular emphasis on long-term planning and commitment and solutions to funding mental health services and local authority social care. And this would enable them to expand the workforce, and also the capacity to meet these rising levels of demand that we were talking about. So that will be probably one of the big solutions. Another one obviously has to do with tackling long waits for mental health support. And, you know, this shows that we are spending the money and paying the price, whether we invest in mental health or not. And also another, we do not show this necessarily, but it is likely that if we leave this problem unchecked, the magnitude of the cost is likely to go up. So you know, this could include things like new access and waiting standards for child and adult mental health services, with sufficient resources obviously.

A third big solution and an important point I think, has to do with giving children and young people access to mental health support, expanding the mental health support teams to all schools and colleges in England, and this is acting as treatment but also as prevention. And we know that is probably one of the most cost efficient strategies, one of the highest measures in terms of return on investment. As well as, really importantly, funding a nationwide network of early support hubs for young people in every local authority. And finally, last but not least, modernising the Mental Health Act. We know it is not fit for purpose and this would enable us to reduce the use of coercion and tackle racial disparities in the mental health system, which must obviously be backed by by investment in the mental health space.

AJ: Thanks, that’s all super helpful. And obviously, we will link to those reports in the show notes. And yeah, we are just calling on all political parties to be adopting the measures that you’ve mentioned, and many more listed in that report in their manifestos ahead of this year’s general election. So it’s huge. But I just want to say, thank you so much, Fred. And I think, you know, what struck me is that we cannot seek to truly tackle the problem until we know the scale of it, you know, we cannot tackle the impact of mental health until we actually recognise this. And so I think this is really an amazing piece of work in terms of bringing the reality of these costs into the light, as you say, kind of showing people the truth of what we are dealing with, and therefore creating impetus to really address and harness those solutions, which we have. So lots of reasons for hope there. But thank you for just showing us the reality.

FC: Thank you for the opportunity to and it’s been a pleasure.

AJ: Thanks so much for listening. I really hope this conversation inspired you in the fight for mental health equality. We rely on support to fight for change, so please give what you can at centreformentalhealth.org.uk/donate. See you next time.

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