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Healthcare costs account for most of £78 billion spent on UK poverty

1 August 2016

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Poverty costs the UK £78 billion every year, with the majority spent on healthcare, according to a new report from the Joseph Rowntree Foundation.

The report, Counting the cost of UK poverty, found that of the £78 billion spent, £29 billion is spent every year on treating poverty-related health conditions.

This amount 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.

Furthermore, the £29 billion makes up 25% of all health spending.

Professor Donald Hirsch, from the Centre for Research in Social Policy at Loughborough University and one of the report’s authors, 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.

“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 report found that the £78 billion, which is equivalent to 4% of the UK’s GDP, also includes £4.6 billion spent on adult social care and £7.5 billion on children’s services, such as free childcare for deprived two year olds.

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.

She added: “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.

“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 foundation is set to launch a comprehensive plan to solve poverty in the UK in September.

It will lay out what government, businesses and individuals can do to support families and communities, improve educational attainment and build skills, promote growth and boost incomes and ensure that everyone has the chance of a decent and secure life.