This paper examines what has been achieved in the specialist mental health services by the vastly increased health expenditures that the National Health Service (NHS) has enjoyed in the past 5 years.

To describe the way money has been spent in specialist mental health services and examine why problems remain after such admirable changes to already available resources.

Changes in staff employed by mental health services, where the extra staff are deployed, and patterns of expenditure within the whole service and within community mental health teams are examined.

Some of the new expenditure has been well spent, and has produced improvements in the service. However, one must also take account of the costs of the greatly increased numbers of managers, who impose two sorts of costs: that of their own salaries, and the opportunity costs of front-line staff having to attend meetings and write reports rather than seeing patients. Throughout the rest of the NHS, money has been wasted on needless reorganisations, on consultant and general practitioner contracts, and on information technology that has so far failed to deliver tangible advantages.

The emphasis on central control undermines local initiatives and wastes resources. Some central control is inevitable, but policies need to be developed in collaboration with clinicians. At local level, expenditure by primary care trusts and mental health trusts also needs to be scrutinised by committees that should include representatives of front-line mental health staff.