Poverty costs UK £78bn a year, Joseph Rowntree Foundation says

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The effects of poverty in the UK cost the average taxpayer £1,200 a year, and the UK £78bn in total, a report says.

The Joseph Rowntree Foundation looked at how poverty – living on incomes below 60% of the median – affected different government services.

The NHS bore the brunt of the costs, it said, as those in poverty were “more likely” to suffer ill health.

The government said employment was key to beating poverty, adding that “we’ve made good progress”.

The foundation, which funds research into social policy, said its total bill for poverty did not include money spent on benefits.

It said the research, conducted by Heriot-Watt and Loughborough universities, was the first to look at how much poverty across all age groups costs different government departments.

The report outlined the following key costs:

• £29bn on treating health conditions associated with poverty
• £10bn on schools providing initiatives such as free school meals and pupil premium for poorer students
• £9bn on the police and criminal justice systems dealing with the higher incidence of crime in more deprived areas
• £7.5bn on children’s services and early years provision, such as free childcare for deprived two-year-olds
• £4.6bn on adult social care
• £4bn on housing

The foundation said the researchers examined all areas of public expenditure associated with the direct costs of poverty and the prevention of future poverty.

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Professor Donald Hirsch from Loughborough University, co-author of the report, said it was hard to estimate the full cost of poverty, “not lease its full scarring effect on those who experience it”.

However, he said the report showed the “very large, tangible effects on the public purse”.

He added: “The experience of poverty, for example, makes it more likely that you’ll suffer ill health or that you’ll grow up with poor employment prospects and rely more on the state for your income.

“The very large amounts we spend on the NHS and on benefits means that making a section of the population more likely to need them is extremely costly to the Treasury.”

‘Links to mental illness’

The report said it was “widely accepted” that there is a strong relationship between poverty and ill health.

In extreme cases, for example through malnutrition or by living in cold, damp or unsanitary housing, there is “clearly” a link.

However, the report said there is growing evidence of links between poverty and mental illnesses, where the stresses of living in poverty triggers “serious episodes” of ill health.

At the same time, there has been a growing public health concern about a range of behaviours that impact physical health, such as smoking, drinking alcohol, lack of exercise and poor diet.

Finally, the report pointed out that ill-health can lead to poverty, by preventing people from working.

‘Poverty wastes potential’

Julia Unwin, the foundation’s chief executive, called for “real action” to tackle the causes of poverty and reduce the bill for taxpayers.

She said: “Poverty wastes people’s potential, depriving our society of the skills and talents of those who have valuable contributions to make.

“This drags down the productivity of our economy, hinders economic growth, and reduces tax revenue.”

A government spokesperson said creating a Britain that worked for everyone “means tackling the root causes of poverty”.

The spokesman cited “more people in work than ever before”, the National Living Wage and free childcare as areas in which “good progress” had been made.

They said there was “more to do”, adding that it was “taking action” across other areas such as education and family breakdown.