London — A new report from the London School of Economics (LSE) suggests that investing additional funds into mental health services would offer a greater boost to economic growth and national wellbeing compared to allocating the same funds to infrastructure projects like new roads.
The LSE analysis advocates for a shift in government spending priorities, urging policymakers to focus more on how investments improve people’s lives, particularly in terms of mental health and overall wellbeing. This recommendation comes ahead of Chancellor Rachel Reeves’ upcoming budget announcement, which will outline spending priorities for the next five years.
Researchers evaluated the cost-benefit ratios of various spending policies across government departments to highlight the potential benefits of reallocating funds from expensive road projects, such as the Lower Thames Crossing, to health, education, and skills development.
The report finds that targeted investments in mental health and addiction services not only offer substantial benefits to individuals but also result in reduced overall costs for health and welfare services. This, in turn, could generate economic returns as individuals return to the workforce. Specifically, it was noted that psychological therapy for addiction and employment support for moderate mental illness would provide a return on investment within two to three years.
In contrast, the study found that road projects, including the proposed Lower Thames Crossing, deliver lower returns in terms of wellbeing. For instance, the average road scheme was found to generate benefits equivalent to just three times its cost, while the Lower Thames Crossing’s benefits were estimated at only 1.5 times its cost.
The report, titled “Value for Money,” is set to be officially launched on Tuesday at the Institute for Government’s offices in central London. It is supported by prominent figures such as former civil service head Gus O’Donnell and Amanda Rowlatt, a former chief analyst at the Department for Transport. The findings are based on a cost-benefit analysis model similar to the one used by the National Institute for Health and Care Excellence (NICE) for evaluating new drugs and therapies.
Richard Layard, a co-author of the report and emeritus professor of economics at LSE, emphasized the importance of considering the broader impacts of spending decisions. “The science now allows us to estimate benefit-cost ratios for most policies. These should be central to the next spending review,” Layard said.
O’Donnell echoed this sentiment, calling the report “exceptionally important” and urging it to lead to significant improvements in how government funds are utilized to enhance public welfare.
The Treasury has declined to comment on the report at this time.
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