Poor housing costs the NHS £2.5 billion a year in treating people suffering from a wide range of illnesses linked directly to living in cold, damp and often dangerous homes, according to a new study.

The research, commissioned by the National Housing Federation, also reveals the cost to the public purse of police responses to crimes associated with substandard housing as being around £1.8 billion a year.

Overcrowded homes meanwhile severely damage children's chances of doing well at school – fuelling a cycle of poverty in poorer communities, the study by research group Ecotec found.

The Federation called on the main political parties to tackle the scandal of poor housing by protecting the housing budget after the election – thereby ensuring that the 840,000 affordable homes currently planned for the period up to 2020 can still be built.

A record 4.5m people are on housing waiting lists in England, and rising unemployment and repossessions has further fuelled demand for affordable housing during the economic downturn.

The number of families living in overcrowded housing has reached epidemic proportions in many cities, with around 2.5m people living in cramped and unsuitable conditions.

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The report, entitled The Social Impact of Poor Housing, provides an analysis of numerous research projects and studies into the impact of low quality housing.

It finds strong links between poor housing and health problems, low educational attainment and an 'association' with crime and reoffending.

People living in homes that are cold, damp and affected by mould are far more likely to get ill, while those classed as officially homeless and living in temporary accommodation appeared to suffer from a higher incidence of sickness.

Homeless children were four times more likely to suffer from respiratory infections, five times as many stomach infections and made twice as many emergency hospital visits, six times as many speech and stammering problems and four times the rate of asthma compared to permanently housed children, a previous study found

The economic cost of treating people suffering illnesses where poor housing was identified as the prime causal factor was £2.5 billion a year, the report concluded.

Federation chief executive David Orr said: "The three main political parties have pledged to protect the NHS, education and frontline policing from spending cuts – but have not promised to safeguard the housing budget, which protects the money spent on these key services.

"If the housing budget is cut and fewer affordable homes are built, millions will be condemned to living in poor housing for a generation – and will ultimately cost the taxpayer far more money in the long run.

"With record housing waiting lists and overcrowding reaching epidemic proportions in many places across the country, the need for more affordable housing has never been greater.

"The three main political parties must demonstrate their commitment to helping the millions of Britons in desperate need of an affordable home by pledging to safeguard investment in housing – and giving it the same priority as health, education and policing."

(CD)