Is mental health at risk under new welfare reform proposals?

Across many high-income countries, mental ill-health has become a leading driver of health-related economic inactivity. ⁴ The UK reflects this wider trend, with depression and anxiety now the most reported health conditions in the working-age population but since COVID-19, economic inactivity due to ill health or disability has remained elevated in the UK while stabilising or falling in countries such as Germany and France. ⁴ Against this backdrop, the UK government initially planned to reduce disability benefit spending by £5 billion by 2030, claiming that proposed reforms would make the welfare system more sustainable, curb rising costs, reduce economic inactivity and encourage people with health conditions and disabilities back into work. Public and political opposition to the proposals, however, led to the government u-turn on these plans.

Welfare reform is never a purely fiscal process – it reflects political and moral ideas about work, responsibility and who is considered ‘deserving’ of state support. Across many high-income countries, public debates around disability and incapacity benefits have increasingly drawn on narratives that distinguish between the ‘deserving’ and ‘undeserving’ poor. These narratives frame reduced welfare spending not only as an economic necessity, but as a moral imperative, particularly where claimants are perceived as capable of work.

In several high-income countries, disability and incapacity benefits have been restructured around stricter assessments and behavioural conditionality. UK welfare policies also reflect this trend – with previous reforms involving stricter eligibility criteria and increased conditionality for accessing disability and incapacity benefits. Although disability benefit is not means-tested nor subject to work-related conditionality, many recipients report that the disability benefit assessment process is highly stressful, citing difficulties such as confusing assessment questions and unhelpful interactions with assessors. For many, the repeated need to demonstrate one’s ‘deservingness’ can exacerbate mental health problems.

Evidence of the benefits of these reforms is contested. An international review of disability benefit reforms across several OECD countries found limited evidence that tightening eligibility or conditionality increased employment among people with chronic illnesses and disabilities. UK studies have indicated that benefit receipt was associated with rising food insecurity and worsening mental health, while finding limited impact on employment rates. However, other analyses suggest a more nuanced picture: single parents receiving benefits were more likely to be in work within six months of making a claim compared with those on legacy benefits, with a stronger employment effect observed for single parents than for single adults without children. These inconsistent findings highlight the uneven impact of benefit reforms, with some groups experiencing employment gains and others increased financial strain and poorer mental health outcomes.

The inconsistency in the evidence raises questions about the effectiveness of welfare reform as the primary means for addressing economic inactivity. The Mayfield Review suggests that reducing economic inactivity requires attention to workplace conditions, emphasising early intervention, inclusive workplace practices and support for people with long-term conditions. Its focus on employer responsibility suggests that reducing economic inactivity may require reform of the broader employment system. However, this approach is likely to have limited impact for those who are already economically inactive due to long-term illness or disability, for whom re-entry into work may be shaped by entrenched health, skills and labour market barriers.

In contrast, qualitative research showed that people’s employment barriers rarely arise from mental ill-health alone. ^{Reference Irvine and Lovelock5} Instead, participants described a combination of challenges that include insecure housing, trauma, discrimination and transport difficulties. These factors often interact with mental distress, affecting a person’s capacity to work. When welfare systems treat ill-health as the only acceptable reason for not working, people feel pressured to present their struggles as medical issues, even when the real barriers are social or economic. This reinforces the medicalisation of socioeconomic hardship, restricts access to appropriate support and increases distress. ^{Reference Irvine and Lovelock5}

Evidence from past reforms: lessons ignored

Welfare reforms – cost cutting or cost shifting?

Welfare reforms have overlooked consequences for the healthcare system. Individuals already facing socioeconomic disadvantages – such as low income, insecure employment, inadequate housing – are at increased risk of experiencing further financial hardship following welfare reform. The financial strain can exacerbate mental health problems and increase demand for healthcare services.

International evidence indicates that tightening eligibility to disability benefits was associated with modest increases in employment. However, many people who lose access to disability benefits do not move into sustained work and are often shifted onto other, typically less generous, forms of support, or remain out of work altogether. This can increase financial insecurity, particularly among those with existing health conditions or limited labour market opportunities.

UK mental health services have struggled with persistent underfunding, exacerbated by austerity policies, and service delivery models that often fall short of meeting the complex needs of those accessing care. Welfare reforms that reduce income security may therefore place additional pressure on an already stretched healthcare system. An analysis by the Disability Policy Centre suggests that cuts to disability benefits could lead to an estimated £1.2 billion in increased expenditure for NHS and social care services. Cutting social support may reduce short-term spending but risks worsening health inequalities, intensifying pressure on under-resourced services and shifting rather than reducing costs.

Towards welfare models that promote mental health

The current trajectory of welfare reform – centred on conditionality, sanctions and increasingly restrictive eligibility – risks increasing mental ill-health, poverty and widening health inequalities. Welfare systems should be designed around financial security, dignity, upstream determinants of health (e.g. housing, healthcare access) and enabling support that promotes favourable health outcomes. Emerging evidence suggests that Universal Basic Income (UBI) – a system of regular, unconditional cash payments to residents – has the potential to confer substantial health benefits at a population level. ⁹ Qualitative research indicates that individuals from low-income communities anticipate material security under UBI would reduce stress, improve health and limit the shame associated with the current UK welfare model. Other systems could include expanded access to supported employment programmes which provide person-centred assistance to help people with mental health conditions engage with work. Supported employment aligns closely with several government initiatives. Increasing access to psychological support services that many participants require, while improving occupational health provision helps employers sustain people in work through appropriate adjustments. Such approaches should aim not to compel individuals into work at any cost, but to create the social and psychological conditions in which economic participation becomes possible and meaningful.

In conclusion, reflecting on welfare reforms, it is crucial to reflect on the legacy of past policies to inform more effective and equitable future welfare policies. The cases of Michael O’Sullivan, Kevin Gale and Nazerine Anderson show how welfare processes can contribute to financial insecurity, undermine dignity and harm health. With mental ill-health now a leading cause of long-term sickness and economic inactivity, the implications of welfare policy for public mental health can no longer be treated as secondary concerns.

Empirical evidence alone cannot determine the future of welfare provision. Decisions about social support are inevitably shaped by values, ideology and political narratives surrounding work, responsibility and deservingness. Empirical findings can inform policy, but they cannot resolve ongoing debates about the role of the state in social support or who is ‘deserving’ of this support. A more effective and humane welfare system would recognise the diverse and often interacting barriers that shape people’s capacity to work. These include not only health conditions but also challenges related to housing, childcare, transport, education, discrimination and the design of the welfare system itself. The reforms should aim to balance economic objectives with strategies that protect mental health and promote social inclusion, thereby also supporting employers to foster inclusive and healthy working environments. Doing so offers the opportunity to build a welfare system that is effective, proportionate and responsive to the diverse needs of the communities it serves.