Poverty costs British taxpayers £78bn a year – report

Every British taxpayer spends £1,200 annually on reversing the effects of poverty, new research has shown.

The report, published by the Joseph Rowntree Foundation (JRF), found that even when benefits spending is excluded the public spends a total of £78 billion (US$102 billion) – equal to just over 4 percent of gross domestic product (GDP) – on dealing with the impact of poverty.

One fifth of all the money spent on public services in Britain is being used to combat poverty, the research found.

The report, which drew on research by Heriot-Watt and Loughborough Universities, estimates £69.2 billion worth of spending goes towards public services such as healthcare, education and policing.

The report found that healthcare is the highest of the poverty-related costs, with £29 billion going to treat health conditions associated with poverty. Another £10 billion is spent on measures such as free school meals, and a further £9 billion spent to counteract higher crime rates in deprived areas.

Up to £9 billion accounts for lost tax revenue.

The authors noted the figures are a “broad brush estimate” and that it is difficult to gauge the full cost of poverty.

Co-author of the report Professor Donald Hirsch of Loughborough said: “It is hard even to estimate the full cost of poverty, not least its full scarring effect on those who experience it.”

“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,” he said.