The mental health of people in the UK who were newly reliant on benefits and other financial support during the coronavirus pandemic has worsened the most, according to research.

The “largest and most worrying increases” in mental distress have been in groups who started off in the weakest financial position or who have required more financial help throughout the crisis, the National Centre for Social Research (NatCen) found.

It analysed data collected from more than 12,000 people aged 16 and over between April 2020 and January 2021 as part of the Understanding Society Covid-19 survey for its annual Society Watch report.

One group it identified was ‘financial help-seekers’ – people who needed financial support other than the furlough scheme, such as the Self-Employment Income Support Scheme or a new claim for Universal Credit.

It found that 42% of those who sought financial help reported being in poor mental health at the beginning of 2021, up from 29% before the crisis.

Members were most likely to be female (64%) and to have children (41%), while people from black, Asian and minority ethnic backgrounds were twice as likely as white people to require financial support.

A separate group of ‘multi-strugglers’ – those facing numerous and long-term financial difficulties – consistently faced the highest levels of mental distress both before and during the crisis.

More than half (54%) of this group reported poor mental health in April 2020.

This group had the highest proportion of new Universal Credit claimants, and people from black, Asian and minority ethnic backgrounds were more than twice as likely as white people to be members.

Between May 2020 and January 2021, people in this group were three times more likely than people whose finances improved during the crisis to report a new diagnosis for a mental illness.

NatCen said a substantial increase in mental distress occurred in the early months of the pandemic, with prevalence higher in those with pre-existing health conditions and those living in low-income homes.

New inequalities also emerged, with women, people living with young children and those in employment at the start of the crisis being at risk of larger increases in mental distress.

NatCen also carried out focus groups and said the responses “chime with a growing body of evidence highlighting how this crisis is disproportionately impacting the most vulnerable”.

Participants spoke of how support for self-employed workers was particularly lacking.

There was also a “palpable feeling of injustice and resentment” that the £20 a week uplift to Universal Credit had not been extended to those receiving legacy benefits and that this has exacerbated existing inequalities.

One respondent said: “I have to choose between paying my mortgage, eating and heating. I expect to lose my house by the end of 2021.”

Dr Neil Smith, NatCen head of analysis, said: “We can observe increased mental distress across the population as a consequence of the pandemic, but people faced with growing financial insecurity have been far harder hit than the financially secure.

“With the economic fallout of the pandemic expected to continue, the mental health of people relying on employment and benefits support during the crisis should not be ignored.”

Guy Goodwin, NatCen chief executive, added: “As pandemic restrictions ease, we might expect improvement in the public’s mental health. Longer term, improving mental health might be related to the ‘levelling-up’ agenda for the United Kingdom.

“If we have a strong economy where economic benefits are more evenly shared and fewer people are ‘left behind’, we might begin to see longer-term improvements in mental health.”

A Government spokeswoman said: “We are committed to supporting everyone’s mental health and well-being. We are expanding and transforming mental health services in England, backed by an additional £2.3 billion a year by 2023/24 and throughout the pandemic mental health services have been open.

“For those with severe needs or in crisis, all NHS mental health providers have established 24/7 urgent mental health helplines and our mental health recovery action plan – backed by £500 million – will ensure we offer the right support over the coming year to help people with a variety of mental health conditions. We would encourage anyone who may be struggling with their mental health to come forward for help.”