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The Spending Review 2020: your questions answered

The Spending Review 2020: your questions answered

30/11/2020

On Wednesday 25 November, The Chancellor of the Exchequer, Rishi Sunak delivered his first Spending Review in Parliament.

The Spending Review determines how much is spent on public services. Anyone who ever uses any service provided by government will be directly affected – this includes NHS hospital, schools, or uses roads and much more. There had previously been plans for the Spending Review to cover the next 3 years, but the uncertainty caused by the pandemic meant that this was reduced to one year. The Spending Review follows a budget in March this year and an “emergency summer statement” in July, both of which also announced elements of the Government’s financial response to Covid-19.

We asked our Public Affairs and Stakeholder Manager, Tristan Westgate, some of the most important questions about the Spending Review from the perspective of people severely affected by mental illness, and their carers.

Spending Review 2020: Your questions answered

Yes, last week the government announced £500 million of new funding to support mental health services over the next year, in response to the increased demand, workforce issues, and addressing waiting times – all stemming from the pandemic.

This includes money for the following:
• £50 million will be used to ensure safe discharge from hospital. This money will be spent by March. It could be used towards anything from making existing housing safe and habitable through to building more supported housing. The money equates to roughly £1 million per mental health trust.
• A push to GPs/local systems to do rapid outreach and engagement with people living with severe mental illness (SMI), and more effort on increasing uptake of physical health checks.
• Explicit reference to continuing face to face appointments and support.
• A “cross-government” ministerial group and social care taskforce will report early next year.
The £500 million announced for mental health services in response to the pandemic is welcomed, although discussions continue about exactly how it will be spent. Covid-19 has caused a huge increase in demand for mental health services, which effects access for people across the country, and this funding should go some way to improving access to services.

However, the impacts of pandemic on mental health will last beyond the next 12-months and will demand further support and funding. We hope that the government will continue to recognise the scale of mental health the challenge the country faces and responds proportionally.
Disappointingly, the government has failed to make an announcement on the £20 uplift in Universal Credit, which will expire in March 2021. This has benefited 6 million families by £1000 per year, who will be desperate to know what will happen to the uplift in just a few months – they deserve clarity. The Government has also not yet addressed the fact that the £20 uplift only applied to Universal Credit and not to “legacy benefits” such as Employment and Support Allowance, which is relied on by many people living with mental illness and other disabilities.

The Covid-19 pandemic has revealed shortcomings of the welfare system. The government has papered over systemic issues during this crisis with the furlough system and temporary welfare expansion. In the long term however, Rethink Mental Illness would like to see the welfare system reformed so that it genuinely supports people living with mental illness.
The latest figures show that unemployment has risen by more than 300,000 since before the pandemic, to a total of 1.62 million. This is expected to surge to 2.6 million by the middle of next year.

In response to these troubling figures, the Chancellor stated that his "number one priority is to protect jobs and livelihoods”. He announced a £4.3 billion package to “help hundreds of thousands of jobless back to work”, include a £2.9bn for a new Restart jobs scheme and £1.4bn to expand the Jobcentre Plus agency.

Under the Restart scheme, people who have been out of work for more than 12 months will be provided with regular intensive support tailored to their circumstances. The government has also said that the Plan for Jobs, which includes £1.6 billion for the Kickstart work placement programme, will create up to 250,000 state-subsidised jobs for young people. The scheme, first launched in August, offers employers £2,000 for every new worker they take on, is to be extended to the end of March.

The long term economic impact of Covid-19 – in terms of unemployment, reduced wages and constrained public spending could have serious impacts on the nation’s mental health. There is clear evidence that previous recessions have led to an increased prevalence of mental and physical health conditions, in addition to any impact that are particular to the pandemic, like the psychological effects of lockdowns.
The Chancellor evidently did not believe that this Spending Review was the occasion to begin tackling the debt comprehensively.

The Chancellor has however put the wheels in motion for cuts and tax rises in future. He was clear that “we have a responsibility, once the economy recovers, to return to a sustainable fiscal position.” He did not specify whether he favoured tax increases or spending cuts, though it is likely to be both. It is also not clear how quickly the Government will attempt to pay off the debt. While huge sums of money continue to be spent in the short-term on our response to the pandemic, it is likely that future cuts will prove to be painful for certain sections of society.
The recession caused by the Covid-19 pandemic has already arrived and will be difficult for many. Furthermore, evidence shows that economic downturns have a disproportionately difficult effect on people with SMI, and we are determined to ensure everything is done to ensure that the people who need it most are effectively supported.

Encouragingly however, all recessions have different causes and manifest differently. Unlike the 2007-09 financial crisis, this downturn was not caused by systemic issues in the economy, but instead by the enormous impact that lockdown had on spending and consumer confidence. Consequently, we’re optimistic that the economy will recover more quickly.