Poverty is costing the public purse £78 billion each year – or £1,200 per taxpayer, according to a new report from the Joseph Rowntree Foundation. Counting the cost of UK poverty estimates that in addition to £69 billion in public service spending to support people living in poverty, the knock-on costs in the future of dealing with problems caused by poverty amount to £6 billion for children and £2.7 billion for adults. The total cost amounts to a fifth of all public service spending.

The report, which is based on research from Heriot-Watt and Loughborough universities, says that the “persistence of poverty is a scar on rich countries”, and that while the “divisions and insecurities that it can create are impossible to quantify fully”, there are areas where the cost of addressing both present-day poverty and its knock-on effects can be measured with some accuracy. The authors examine numerous areas where public spending must compensate for poverty-related issues, including healthcare, education and transport.

The NHS shoulders the highest costs, with £29 billion spent every year on treating health conditions associated with poverty. The authors explore the correlations between poverty and poor health outcomes, including the direct impact of poor nutrition and insanitary living conditions, increased vulnerability to mental illness and harmful behaviours such as smoking tobacco and alcohol consumption.

Breaking down the cost to the taxpayer, the report finds that clinical commissioning groups have to allocate an additional £334 per individual per year on people from the most deprived quintile compared to those in the least deprived (£1325 compared to £991). Spending on drug and alcohol treatment and in-patient stays is also higher for this group.

The Joseph Rowntree Foundation’s chief executive Julia Unwin said: “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.”

A Government spokesperson commented that while it was “tackling the root causes of poverty” by addressing areas like education and family breakdown, “there is more to do.”