How Much Does The ‘War on Drugs’ Cost?

by Jay Jackson

Our current prohibitionist approach to drugs is incredibly easy to argue against, but rhetorical flourishes have, as yet, not translated into meaningful policy change. For policy-reform advocates looking to catalyse that change, few lines of argument are more effective than demonstrating the staggering costs associated with a policy-agenda that actively undermines its stated aims.

With the Labour Party recently having committed to establishing an independent ‘Office for Value for Money’ (yes, really), scrupulously examining and highlighting how poor value the ‘war on drugs’ is for the country may be a way for drug policy wonks to grab the attention of the public. 

Just how much does the ‘war on drugs’ cost? How much public money is funnelled into a policy agenda that failed to prevent (some might say contributed towards) 4,651 drug poisoning deaths in England and Wales in 2020? How is that money spent? Are we, as a country, getting value for money?

(N.B. This article will focus on England and Wales only due to complications arising from the devolution of powers to Scotland and Northern Ireland). Naturally, quantifying how much the pursuit of the ‘war on drugs’ costs depends on how you define it.

Firstly, there are the direct costs associated with the current approach, “these reflect the diversion of resources towards the management of drug use”, which according to Dame Carol Black’s 2021 review amount to nearly £9 billion per year. For context, this is roughly the same amount as the total annual budget for the Ministry of Justice. This includes the cost of enforcement (£680 million), criminal justice system costs (£733 million) and spending on community treatment and prevention (£553 million).

It’s important to note that spending on community treatment and prevention has been slashed by up to 40% since 2010, and that this has had a disproportionately negative effect given that every £1 spent on treatment services prevents £4 worth of spending on health, enforcement and emergency services. This is the most damning example of the complete economic illiteracy of our current approach to drugs. 

Then there are indirect costs – which “represent the resources unavailable for productive use because of drug use, for example absenteeism, or in the case of crime, the cost to avert future victimisation through defence and insurance policies.” Most notably including £1.8 billion in indirect costs related to crime. 

Finally, there are intangible costs – a cost that can be identified, but cannot be easily quantified. Examples include a willingness-to-pay to avoid pain, grief and suffering, or loss in length and quality of life. These total £6.67 billion according to Black’s review. 

Combined, the three cost types total nearly £20 billion per year – two thirds of which are either direct or indirect and thus tangible costs – roughly the entire GDP of Jamaica

The vast majority (86%) of these costs come from people with substance abuse disorders pertaining to illicit opiates and crack cocaine – and the estimated economic cost for each such person is 50 times that of other drug users. By offering these people the support they need, we could save lives whilst also saving money – which we could use to further reduce harms, saving even more lives.

Saving £20 billion per year could fund the employment of nearly 600,000 nurses, half a million teachers, or almost 700,000 police officers. Alternatively, it could finance an entire Crossrail-sized infrastructure project every single year – although, perhaps that’s not the best example of efficient government spending either. 

Black’s review also accounts for what it calls social and economic costs associated with people with drug problems. These are the costs that “do not directly result from drug use (there is no direct causal link) but we assume there is an association, for example, in many cases someone with an untreated drug problem may struggle to hold down a job”. These costs totalled another £4.5 billion in 2017-18 – ninety percent of which were attributable to costs associated with unemployment.  

What the Black review fails to account for are the potential revenues to the exchequer from a regulated drug market. According to a 2018 report from Health Poverty Action, introducing a legal cannabis market to the UK could earn the Treasury £3.5bn a year in tax revenues. This constitutes a sizeable opportunity cost associated with our current approach, further emphasising the financial opportunities should we decide to change course. 

One thing is absolutely clear – the war on drugs is an expensive waste of time, effort and money. The costs of its continued pursuit are both shamefully large in human terms, and bewilderingly bad value monetarily. There are too many victims and no prospect of victory: the war on drugs is one we can no longer afford to fight.

This piece was written by Jay Jackson, Head of Public Affairs at Volteface. Tweets @wordsbyjayj

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