New research reveals cost of poverty to public services at £78 billion

By The Press Association1st August 2016News EnglandAusterity, Benefits, Child Poverty, Local Authorities, News England, Poverty / Austerity, Welfare / Benefits

Poverty costs the UK taxpayer £78 billion a year in additional public service spending and lost taxes, according to a new report.

The research, commissioned by the Joseph Rowntree Foundation, estimated an extra £69.2 billion – or £1 in every £5 of public spending – went on areas including healthcare, schooling and policing.

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

Researchers at Heriot Watt and Loughborough Universities counted the costs of the consequences of poverty for people on low incomes, defined as living below 60% of the average, the money spent on relieving deprivation and on preventative measures.

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

A further £7.5 billion is spent on children’s services, £4.6 billion on adult social care and £7.9 billion 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, from the Centre for Research in Social Policy at Loughborough University and one of the report’s authors, 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.

Julia Unwin, 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.”

A Government spokesman said: “We’re committed to creating a Britain that works for everyone, and that means tackling the root causes of poverty. Employment is key and we’ve made good progress – there are now more people in work than ever before, millions are receiving a pay rise thanks to the National Living Wage and we’ve doubled free childcare to 30 hours.

“But there’s more to do and we’re taking action across other areas like education and family breakdown so we can help more people to succeed in life.”