Poverty costs the public £78bn a year – to cut costs the government should eradicate it

The short-term costs to tackling poverty are worth it, according to new research


One pound in every five spent on public services is used to combat the cost and impact of poverty, new research shows.

The new report, produced by Heriot Watt and Loughborough Universities in partnership with the Joseph Rowntree Foundation, shows that the long-term costs of poverty far outstrip the short-term costs of taking concerted action to reduce poverty.

‘Taking real action to tackle the causes of poverty would bring down the huge £78 billion yearly cost of dealing with its effects, and mean more money to create better public services and support the economy,’ commented Joseph Rowntree chief executive Julia Unwin.

‘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.’

The £78bn figure incorporates lost tax revenue and additional benefits spending, as well as increased public service spending across a range of government departments.

The researchers found that:

  • The NHS spends £29bn every year treating health conditions associated with poverty — almost equal to the reported NHS deficit of £30bn,
  • Schools spend £10bn each year supporting poor pupils, through initiatives like free school meals and the Pupil Premium.
  • The higher incidence of crime in areas affected by poverty costs nine billion in police and criminal justice spending.
  • Social services for children in poverty, such as free childcare, costs £7.5bn per year.
  • Adult social care is associated with £4.6 billion of the cost of poverty.
  • Housing adds £4 billion to the annual public service cost of poverty

Additionally, the report highlights that children who grow up in poverty are less likely to be employed as adults and to suffer other long-term effects, meaning that leaving children in poverty incurs cyclical public costs.

Theresa May has emphasised her commitment to ‘living within our means’ and to ‘fighting burning injustice’.

So hopefully she will heed the clear message of today’s report: that investing in eradicating poverty is not only an ethical imperative, it is also cost-saving in the long-term.

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