Mental health crisis care and welfare reform: a tipping point

In March, I wrote about the potential impact of the government’s proposed welfare reforms on mental health crisis care. Since then, The Health Foundation’s latest analysis has added serious weight to those concerns, offering a detailed statistical picture of just how widespread and damaging the changes could be.

The numbers are hard to ignore. Over three million people are expected to lose out financially. Around 800,000 individuals could lose an average of £4,500 a year through changes to Personal Independence Payment (PIP). For people living with mental health conditions, particularly those whose illness is severe or acute, this is not just a hit to their income. It is a risk to their wellbeing, their safety and their ability to stay well.

A troubling cycle for those in crisis

There is nothing theoretical about the link between money and mental health. Poverty is a clear driver of mental illness. And for people already managing a condition, added financial strain can have a direct and immediate impact on their ability to cope.

The Health Foundation’s modelling shows that cuts to benefits will likely result in increased anxiety, stress and depressive symptoms. Removing the Work Capability Assessment and linking health-related benefits to Personal Independence Payment alone will almost certainly disadvantage those with fluctuating, less visible or stigmatised conditions. For some, the fear of losing support may even deter them from engaging with services at all.

The result is a system that risks pushing more people closer to crisis. When individuals reach that point, it is crisis teams, A&E departments and acute inpatient services that feel the strain most acutely. This is particularly true for those supporting people who may go on to be detained under the Mental Health Act.

The knock-on effect for crisis care

At Thalamos, we see the effects of crisis every day. We work alongside clinicians, AMHPs, police officers and Trusts across the country who are navigating rising demand and tighter resources. Many of them are already stretched. The risk now is that more people will arrive at their doors as a direct result of welfare reform.

The Health Foundation warns that the proposed reforms could worsen mental health outcomes and increase pressure on already stretched services.

The logic is simple. If someone cannot afford housing, food or heating, it becomes harder to stay well. For those living with serious mental illness, this can tip the balance and trigger the need for acute care.

What the numbers tell us

To put this into perspective, the Health Foundation’s report includes several key statistics that paint a concerning picture for individuals suffering from mental health issues and the services that support them through these.

• An estimated 3.2m families stand to lose an average £1,720 of income per year by 2029/30, with some families gaining and some losing
• 800,000 people stand to lose an average of £4,500 per year through PIP changes
• Mental health issues are the most commonly reported health-related reason for claiming incapacity benefits
• Areas with the highest levels of deprivation, often where crisis care is already under strain, are likely to be hardest hit

The problem with conditional support

Ministers have pointed to the expansion of employment support schemes like Individual Placement and Support (IPS) as evidence of a fairer, more enabling system. There is also planned reform to the approach Job Centres take so that people aren’t pushed into low-quality, insecure work, which are welcome. But as the Health Foundation noted, these schemes cannot succeed unless they are paired with financial security.

Alongside the expansion of IPS, the government has set out a broader suite of reforms aimed at tackling economic inactivity and supporting people with health conditions to remain in or return to work. The Get Britain Working White Paper outlines structural changes to employment services, with greater integration between health, skills, and careers support. The accompanying Pathways to Work Green Paper focuses on reforming health and disability benefits, including plans to reshape assessments and consider new conditionality rules for younger claimants. Meanwhile, the Keep Britain Working review, led by Sir Charlie Mayfield, is exploring how employers can play a more active role in helping people stay in work, especially when managing long-term conditions.

This focus on workplace retention is critical. While system-level reform is necessary, the everyday experiences of people with mental health needs are shaped by the support (or lack of it) they receive from their employer. Without real change in workplace culture, line management practices, and flexible job design, policy reforms alone will fall short of making work genuinely accessible and sustainable for all.

If someone is forced to focus on surviving day to day, they cannot reasonably be expected to engage meaningfully with work preparation. Cutting support before an individual is ready to return to work risks undoing any gains made through employment schemes. It is a short-term saving with long-term consequences.

Where Thalamos fits in

Those of us working in and around the Mental Health Act pathway see these pressures playing out in real time. The professionals we support are increasingly working with people whose needs are more complex and whose crises are being shaped by social and economic forces far beyond clinical care.

Digital tools can help improve the flow of information and reduce delays, but they are only one part of the solution. Policy choices, funding decisions and frontline realities are deeply interconnected. Technology can support a system to function more efficiently. However, it cannot compensate for the broader impacts of poverty, insecurity and inadequate support.

Addressing these challenges requires more than innovation. It requires political will, structural change and a genuine commitment to building services that can meet rising demand with compassion and resilience.

Looking ahead

The Health Foundation’s paints a worrying picture about the proposed reforms and the risk to widening health inequalities, worsening outcomes and driving more people into emergency care. For people at risk of being sectioned, the consequences could be profound.

There is still time to shape this set of changes differently. As legislation moves forward, decision-makers must consider not just the savings on paper but the real-world costs in human terms. That includes the cost to crisis services, to NHS Trusts, to Local Authorities and, most importantly, to the people whose lives are already on the edge.

The goal of helping people into employment is a valid one, and there is no doubt that the welfare system needs updating to fit societal, economic and structural changes. But it must be grounded in empathy, evidence and an honest understanding of the journey that many people with mental illness are on. Without that, we risk making crisis care not just a safety net, but the inevitable end point of a broken system.

Five key takeaways from the Health Foundation’s analysis

The Health Foundation conducts research, analysis and policy advocacy designed to improve health outcomes and reduce inequalities across the UK.

(1) This is the biggest cut to disability benefits in over a decade 

The proposed changes represent the most significant reduction in support for disabled people since 2010, disproportionately affecting those with mental health conditions.

(2) The financial hit is substantial

Around 800,000 people will lose more than £4,000 a year. For people already struggling with the cost of living, this will push many into deeper crisis.

(3) People with mental illness are more exposed to the changes

Mental health is the most common primary condition among those receiving incapacity benefits. This means the proposed reforms will be felt most acutely in this group.}

(4) The changes don’t reflect how mental health conditions work

The removal of the Work Capability Assessment assumes that people can either work or not work. But mental health does not operate in binary terms. It fluctuates. This reform risks penalising people on that basis.

(5) The impact will be local and unequal

Places with high levels of deprivation and existing pressure on services, such as coastal towns and post-industrial areas, will feel the sharpest rise in crisis care demand.