Current Students and Staff

// University News

1 Aug 2016

Poverty costs UK £78 billion per year, research reveals

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A new report – co-authored by Loughborough University – reveals that dealing with the effects of poverty costs the UK £78 billion a year, £1,200 for every person. 

The research entitled Counting the cost of UK poverty was produced by Loughborough University’s Centre for Research in Social Policy (CRSP) and Heriot-Watt University on behalf of the Joseph Rowntree Foundation (JRF). 

It is the first research to illustrate the cost poverty among all age groups has on the public purse[1]. It found that £69 billion of all spending on public services – £1 in every £5 – goes on services which are needed to pick up the pieces from the damage and cost poverty has on the lives of the 13 million people living in it in the UK today. 

The total £78 billion also includes £9 billion lost tax revenue and additional benefits spending resulting from the experience of poverty. It is equivalent to 4% of the UK’s GDP. 

The report shows how poverty cuts across all government departments and areas of public spending[2], including: 

  • Health care accounts for the largest chunk of the spending, with £29 billion every year spent treating health conditions associated with poverty. This is enough to pay the salaries of 126,000 nurses, and is almost equal to the £30 billion shortfall which the NHS has said will appear by 2020. The £29 billion makes up 25% of all health spending
  • Schools spend an extra £10 billion every year coping with the impact of poverty through initiatives such as free school meals and the Pupil Premium. This is nearly20% of the total schools budget
  • Police and criminal justiceaccount for £9 billion of the total annual poverty cost, due to the higher incidence of crime in more deprived areas. This represents 35% of all spending on police and criminal justice
  • Children’s services, including children’s social services and early years provision such as free childcare include £7.5 billion additional spending because of poverty. The amount spent on poverty represents 40% of the early years budget and 60% of the children’s social care budget
  • Adult social care is associated with £4.6 billion of the cost of poverty, 26% of spending
  • Housing adds £4 billion to the annual public service cost of poverty, 37% of spending on housing and communities.

Click here to read the full release.