£78bn annual cost of poverty

Toll of public spending and lost taxes

SOCIETY: Poverty costs the UK taxpayer £78bn a year in additional public service spending and lost taxes, according to a new report, commissioned by the Joseph Rowntree Foundation.

POVERTY COSTS the UK taxpayer £78bn a year in additional public service spending and lost taxes, according to a new report.

The research, commissioned by the Joseph Rowntree Foundation, estimated that an extra £69.2bn – or £1 in every £5 of public spending – goes on areas including health care, schooling and policing.

A further £9bn is either spent on benefits intended to reduce poverty or in lost tax revenue, the report, entitled Counting the Cost of UK poverty, said.

Researchers at Heriot Watt and Loughborough universities looked at the consequences of poverty for people on low incomes, the money spent on relieving deprivation and on preventative measures.

These costs included £29bn in extra spending to treat health conditions associated with poverty, £10bn on measures such as free school meals and the pupil premium, and £9bn as a result of a higher crime rate in deprived areas.

A further £7.5bn is spent on children’s services, £4.6bn on adult social care and £7.9bn in other areas including housing.

The report’s authors admitted the overall figure was a “broad brush estimate” and establishing the full cost was “hard”.

But Professor Donald Hirsch, who is from the Centre for Research in Social Policy at Loughborough University and was one of the report’s authors, explained that poverty has a huge impact on public spending.

He said: “What our figures show is that there are very large, tangible effects on the public purse.

“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 report called for a “coherent” strategy for dealing with poverty which would result in large savings for the Government while improving people’s quality of life.

Julia Unwin, who is chief executive of the Joseph Rowntree Foundation, said: “It is unacceptable that in the 21st Century, so many people in our country are being held back by poverty. But poverty doesn’t just hold individuals back, it holds back our economy too.

“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.

“UK poverty is a problem that can be solved if government, businesses, employers and individuals work together. If we fail to do so poverty will create an even bigger risk to our country today, and for future generations.”

UK poverty is a problem that can be solved Julia Unwin, chief executive of the Joseph Rowntree Foundation