Population‐based indices of needs have an influence on mental health care funding. Over the last 30 years, a number of needs indices have been developed that utilise sociodemographic and service utilisation data to calculate a proxy indicator of population‐based need. This approach is used because indicators of socio‐economic disadvantage expressed as weighted deprivation show a strong relationship with mental health morbidity. In this paper, we review the existing indices, illustrate the application of these indices using east London as an example, and consider the methodological and conceptual limitations of these indices. Although none of the current indices provide a definitive picture, commissioners and providers may find them to be a useful source of contextual information, which may be useful in combination. In England, this is particularly relevant in the light of the increased liberalisation of commissioning services and changes in the funding process.