What does the Spending Review 2025 mean for mental health?

13 June 2025
By Andy Bell
Andy Bell

This week the Government’s three-year Spending Review set out ministers’ plans for public spending in England for the majority of this Parliament.

As is often the case with spending reviews, the picture for mental health is a mixed one. There is some good news for mental health services, especially the pledge to complete the nationwide expansion of school Mental Health Support Teams by the end of the decade. While we need to see adaptations to the current model for these teams to provide a more comprehensive and equitable service, this is encouraging news, and could fulfil the Government’s manifesto pledge to place a mental health professional in every school in England.

For all other mental health services – both in the NHS and elsewhere – there is less clarity about what the next three years have in store. Overall NHS spending is going to rise by around 3% in real terms each year. What proportion of this increase will be devoted to mental health services has not been specified. With the end of the NHS Long Term Plan (through which significant sums were directed centrally by NHS England to implement specific pledges) and uncertainty about the future of the Mental Health Investment Standard (which holds integrated care boards to account for maintaining their share of spending on mental health services) it’s harder to be sure about how much systems will invest in mental health care in the next few years.

pressures on NHS budgets are coming from every direction, and history suggests that when governments remove requirements on commissioners to spend on mental health services, funds are diverted elsewhere.

Many integrated care boards will of course elect to maintain or increase their mental health services investment – knowing that it is both the right thing to do and makes sense economically. But pressures on NHS budgets are coming from every direction, and history suggests that when governments remove requirements on commissioners to spend on mental health services, funds are diverted elsewhere.

The Government’s other manifesto pledges relating to mental health services will also, of course, need dedicated investment. Early support hubs for young people are an essential part of the picture for the future of mental health care, requiring both running and set-up costs. Reforms to the Mental Health Act will need to be funded – not least to provide decent and effective community services for autistic people and people with learning disabilities. And reducing mental health care waiting lists has for too long been overshadowed by waits for elective physical health care.

The picture for social services is even less clear than for the NHS. While there are allocations for both adult and children’s social care, the former is contingent on the Casey Review – which has only just begun, and local government finances as a whole remain challenged. When social services are unable to meet their obligations, relationships with the NHS fracture, and mental health services that depend on good joint working are affected as a result. For public health services – which include drug and alcohol treatment – there is even less clarity, and certainly no sign of a restoration of spending power that was diminished by about £1 billion from 2015 onwards.

For the public’s mental health more widely, and for people living with mental ill health, the Spending Review’s implications go far beyond health and care services. The most positive picture comes from the housing sector, with promises of new investment in social housing. This is a major boost to mental health. Safe, secure, affordable housing is a foundation for good mental health throughout our lives. Likewise, insecure, poor quality housing, and homelessness, are major risk factors for mental ill health. And around a third of people with mental health problems face housing insecurity.

Mental ill health costs society £300 billion a year in England. So investing in prevention and providing better support for people living with mental illness make sense economically.

Worryingly, however, the picture with regard to social security is bleak. While the Government announced a welcome expansion of free school meals and the winter fuel allowance for more people in later life, the absence of a pledge to end the two-child limit on most benefits is deeply disappointing. And confirmation that ministers plan to go ahead with proposed cuts to Personal Independence Payment (PIP) is extremely disappointing and will be devastating to those affected.

All governments face difficult decisions with public spending, and concerns about national security have heightened an already difficult situation for this administration. But there are options that governments can take to make spending decisions informed by evidence. They include ‘wellbeing budgeting’, where the stated goal of spending plans is to maximise the public’s wellbeing. And incorporating a ‘mental health policy test’ in spending decisions can enable governments to explore how they can protect and promote mental health with the resources they have.

Mental ill health costs society £300 billion a year in England. So investing in prevention and providing better support for people living with mental illness make sense economically. There is still time for government departments and agencies to ensure they use their allocations from this Spending Review to maximise wellbeing. And local councils, integrated care boards and combined authorities will face some big decisions about how they support people’s mental health with the funds available to them.

Spending Reviews do not happen very often. This year’s provides barely a glimmer of a brighter future for our mental health and our mental health services. It is now crucial that the funds that are available are spent wisely, and that a cross-government approach to mental health is adopted so that future investment and policy decisions are informed by what will promote the nation’s mental health.

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