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NHS bears brunt of cost of poverty

£29 billion spent per year on poverty-caused ill health

Adrian O'Dowd

Monday, 01 August 2016

The NHS is dealing with the biggest impact of poverty caused problems in the UK at a cost of £29 billion per year, according to a report published today.

The Counting the cost of UK poverty report, published by charity the Joseph Rowntree Foundation, estimated the public financial cost of poverty that comes from additional spending on public services when people need more support from the state.

Overall, dealing with the effects of poverty costs the UK £78 billion a year – the equivalent of £1,200 for every person – says the report’s research, carried out for the charity by Heriot Watt and Loughborough Universities.

It shows that, across all age groups, £69 billion – £1 in every £5 of all spending on public services – is needed because of the impact and cost poverty has on people’s lives. Poverty is described as living on incomes below 60% of the median.

The total, £78 billion, includes £9 billion in lost tax revenue and additional benefits spending resulting from dealing with the symptoms of poverty. This is equivalent to 4% of the UK’s GDP.

When the costs were broken down, the authors found that healthcare accounted for the largest chunk of the spending, with £29 billion spent every year treating health conditions associated with poverty. This £29 billion was a quarter of all health spending.

The figures were calculated using various data sets including hospital episodes; hospital bed usage; data from the health domain of the IMD (Index of Multiple Deprivation) for England considering differences in morbidity, mortality, and mental health disorders; and data from the UK Poverty and Social Exclusion Survey on self-reported health conditions in relation to poverty.

The health costs emerged in various ways including extreme poverty causing physical ill health due to inadequate nutrition and cold or insanitary living conditions; growing evidence that poverty was a cause of mental health problems due to the stresses of living that way; and public health issues such as smoking, drinking alcohol, lack of exercise and poor diet.

Other costs of poverty included:

  • schools spending an extra £10 billion every year coping with the impact of poverty
  • police and criminal justice having to spend £9 billion annually due to the higher incidence of crime in more deprived areas
  • children’s services, including children’s social services and early years provision spending £7.5 billion
  • adult social care spending £4.6 billion
  • housing spending £4 billion

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

Julia Unwin, chief executive of the Joseph Rowntree Foundation, said: “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.”

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