The performance of future governments in tackling poverty should be monitored by the independent Office for Budget Responsibility (OBR) as part of a necessary "seismic shift" in public policy, a leading charity says.

In a report, the Joseph Rowntree Foundation says the government needs to transform its approach from treating the symptoms of poverty to focusing on its causes, such as low pay.

The foundation says that the OBR – set up by chancellor George Osborne in 2010 to offer independent analysis of the public finances – should also be given a formal role in assessing and forecasting levels of poverty. It also calls for the Social Mobility and Child Poverty Commission, chaired by former Labour health secretary Alan Milburn, to have its remit extended so that it can hold the government to account over its record on the issue. The foundation says successive governments have made big promises but have fallen short, with the result that poverty levels are the same as they were 25 years ago. "This is a waste of human potential, a strain on the public purse, and it means the UK economy does not function as well as it could – child poverty alone costs the country £29bn a year," says the study, entitled A UK without Poverty.

This figure combines the direct cost to the state of £5.9bn in extra spending on benefits and lost tax revenue, with about £15bn of extra spending on services to deal with the consequences of child poverty, and an estimated £8.5bn of lost earnings to individuals.

Julia Unwin, the foundation's chief executive, said: "Poverty is a cost the UK cannot afford. It wastes people's potential and drains public finances, hampering economic growth. If we don't act, poverty is likely to increase: the parties' manifestos are the last chance to stem the rising tide of poverty before 2020.

"We need governments to adopt proper strategies to address poverty in the UK – not simple lists of policies, with no road map to its eradication."

The report argues that since 2008, when the economic downturn began, the gap between incomes and the cost of items needed for a socially acceptable standard of living has widened for many people. Overall, the cost of a basket of essentials has increased by 28% since 2008, while the national minimum wage has increased by 14%, average wages by just 9% and benefits for both low-earning and workless households have been cut in real terms.

Despite expected growth in jobs and earnings, the Institute for Fiscal Studies forecasts that the situation will worsen, with poverty increasing to the point where one in three children and nearly one in four working-age adults will be in relative income poverty (after housing costs) by 2020.

Milburn has warned that the government's policies are falling short and called for a rethink. Ministers are committed by law to try to abolish by 2020 child poverty, defined as children living in households below 60% of median income. But few expect the government to meet its legal obligation.

The report argues that work should be, but often is not, a way to build a better life. "Work should offer a reliable route out of poverty, but barriers such as low skills and the high costs of housing, childcare and transport prevent some people from working or earning more. This traps them in poverty and carries an economic cost," it states.

It adds that past strategies have focused too heavily on the tax and benefits system or single policies in insolation and calls for a comprehensive strategy to boost household incomes through higher wages, better work incentives under universal credit, and promotion of the living wage.

Unwin added: "Poverty is real, but it is not inevitable. Looking at the dramatic long-term falls in pensioner poverty should provide some optimism for what can be achieved."