The cost of pensioner poverty and the non-take-up of Pension Credit

The cost of poverty to the public purse can stem from a number of different sources, with higher poverty levels leading to increased spending in various domains. This encompasses both additional spending due to the adverse consequences of poverty and the costs of public service interventions that aim to avoid or ameliorate

these adverse consequences. This could include costs of social housing, increased spending on policing and criminal justice, and increased costs of schooling and child services for children from disadvantaged backgrounds. However, for pensioners, who are the focus of this report, these increased costs are most likely to come from adverse consequences for health and the need for social care that are associated with poverty in later life.

This report examines evidence of associations between higher spending on health and social care and low income in later life. It produces an overall estimate of how much public spending can be associated with the difference between the current income of those who do not claim Pension Credit but are eligible, and their incomes

were they to claim. Like other estimates of this type (notably Bramley et al., 2016), it does not identify a direct causal link between low income and high spending, but rather observes the extent to which the two go together. This shows where there

is potential for reducing service costs by improving incomes. The evidence for this potential comes from a wealth of other research evidence demonstrating causal links between low income and poor health (summarised in Bramley et al., page 12). However, while our calculation thus illustrates the scale of savings that could

potentially be made, it does not demonstrate how much of these savings would directly follow from the increase in incomes.

To provide some context for our proposed analysis, below we summarise what is already known about patterns and explanations of health inequalities in later life, particularly as they relate to income. We then go on to consider previous research that has attempted to estimate the wider costs of poverty and inequality.