World Economy

Poverty Costs UK $103b Annually

Poverty Costs UK $103b Annually Poverty Costs UK $103b Annually

The effects of poverty in the UK cost the average taxpayer £1,200 ($1,589) a year, and the UK £78 billion ($103.3 billion) 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, BBC reported.

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

The report said the strong relationship between poverty and ill health was now “widely accepted”—especially in cases of malnutrition and people living in cold, damp or unsanitary housing.

Ill-health in turn could lead to further difficulty when people were unable to work.

There was also growing evidence of links between poverty and mental illnesses, where the stress of living in poverty triggered “serious episodes” of 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.

  Key Costs

The report outlined the following key costs:

£29 billion on treating health conditions associated with poverty

£10 billion on schools providing initiatives such as free school meals and pupil premium for poorer students

£9 billion on the police and criminal justice systems dealing with the higher incidence of crime in more deprived areas

£7.5 billion on children’s services and early years provision, such as free childcare for deprived two-year-olds

£4.6 billion on adult social care, and

  £4 Billion on Housing

While the study did not include the money spent on benefits such as income support, working tax credits or job seeker’s allowance, the government is spending £24 billion in additional benefits. Around £1.4 billion of the public services cost goes towards employment and support allowance and £1.3 billion are attributed to pension credits, CNBC reported.

The foundation said this was the first research to illustrate how much poverty costs the public purse.

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.”

Donald Hirsch, professor at the Loughborough University and one of the report’s authors, said the poor are most expected to suffer ill health, grow up with poor employment prospects and rely more on the state for income.

He said, “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.”

The Resolution Foundation said in October last year that up to 200,000 households would be pushed into poverty by the end of this parliament.

  Tackling Causes

“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,” said Julia Unwin, chief executive of the charity, in a press release.

A government spokesman said it was “tackling the root causes of poverty” and cited “more people in work than ever before”, the National Living Wage and free childcare as areas in which progress had been made.

The Trussell Trust, which aims to reduce poverty in the UK, said a record number of people were now using its food banks, with 1.1 million three-day emergency food parcels handed out in 2015-16—a rise of 2% on the previous year.